U.S pork sector is headed toward record-high production in Q4

Commercial pork production is on course to achieve a record in the fourth quarter, at slightly more than 7 billion pounds.

Monday 7 January 2019 (9 months 10 days ago)
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Commercial pork production is expected to be slightly more than 7 billion pounds, over 3 percent higher than a year ago. A major factor in large pork production is recently expanded processing capacity in three Midwestern States. Federally inspected (FI) pork production in October was 2.437 billion pounds (5.9 percent above a year earlier); FI production for November is estimated at about 2.3 billion pounds, almost 5 percent above November 2017. Although the additional slaughter day in October this year is also contributing to the quarterly production record, expanded processing capacity enabled the industry to increase its average weekday slaughter rate from 459 thousand head per day in October 2017 to 469 thousand head per day in October 2018. Strong gains in average weekday slaughter characterized November as well. Estimated FI data suggest a November slaughter rate of 470 head per day, compared with 459 head per day in November 2017. The record-high fourth-quarter production forecast is expected despite average dressed weights that are likely to be slightly below last year’s same -period weights. For December, the expected lower dressed weights are not anticipated to significantly offset seasonally higher numbers of slaughter-ready hogs. Prices of live equivalent 51-52 percent lean hogs, for the balance of 2018 and through the first half of 2019, are expected to continue to reflect large supplies of available hogs. Prices next year, however, will likely trend higher, reflecting robust demand for comparatively low-priced U.S. pork — in both domestic and international markets — and increased processor competition for hogs as processing capacity continues to expand. Fourth-quarter prices are expected to average $42-$43 per cwt, about 5 percent below a year earlier. In the first half of 2019, hog prices are likely to fall below prices of a year earlier — $40-$42 per cwt in the first quarter (almost 17 percent below first quarter 2018), and $42-$46 in the second quarter (about 8 percent below prices in the second quarter of 2018) — but prices in the third quarter are expected to be above a year earlier, at $44-$48 per cwt, about 5 percent above prices in the same quarter of 2018.

U.S. pork exports in October were 502 million pounds, 1.5 percent higher than a year earlier. Shipments were lower to Mexico (3.9 percent below October 2017), and to ChinaHong Kong (44.4 percent lower than a year ago). Both these countries have imposed retaliatory tariffs on U.S. pork products. All other things equal, the tariffs make U.S. pork more costly than pork imported by China from other pork-exporting countries. Fourth-quarter exports are expected to be 1.655 billion pounds, more than 7 percent above same-period shipments last year. U.S pork exports to major foreign destinations are summarized in the table below. Quarterly export forecasts for 2019 are increased on expectations of stronger demand from a number of key importers where U.S. pork remains price competitive .

Monday December 17, 20187 ERS-USDA/ United States.
https://www.ers.usda.gov

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