A new year brings new opportunities. But will the challenges of 2025 outweigh the opportunities? Economists encourage pork producers to consider these four important questions.
1. Will production restraint persist?
“Feed costs are down, interest rates are declining and futures are 15% to 20% higher than they were just three months ago. There are plenty of reasons to be optimistic. I expect producers to be thoughtful and measured in their growth plans,” says Altin Kalo, chief economist at Steiner Consulting.
2. Will stronger pork demand in 2024 continue in 2025?
“How can pork win at dinner meals without a recession or economic downturn driving consumers out of beef, to drive carcass value back into the loin and broaden the appeal of ground pork?” asks Dave Weaber, senior animal protein analyst with Terrain.
Both second and third quarter 2024 domestic retail pork demand was up compared to the same periods in 2023. That ended what amounted to six quarters of year-over-year weaker demand. While the data won’t be available for a while to confirm, fourth quarter 2024 domestic demand also appeared stronger, explains Lee Schulz, chief economist at Ever.Ag.
“Through the first ten months of 2024, pork exports by volume increased 5% from the same period in 2023 and value was up 6%. For the year, pork exports are projected to surpass the 2020 volume record and exceed 2023’s value record,” Schulz says. “Common measures of demand only tell us the status of demand, they do not tell us just why it changes. The best we can do is consider the factors that impact demand and how they may change, positively or negatively, in 2025. Higher consumer incomes would allow consumers to buy more of everything, including pork. Higher prices for products for which pork can be substituted would push pork demand higher. How much higher is often highly debated and a topic of research. A positive change in consumer tastes and preferences, though hard to measure, would further boost pork demand.”
3. Will the pork industry invest in additional packing capacity?
Christine McCracken, senior animal protein analyst at Rabobank, says one of the biggest questions on her mind is whether the industry will focus its resources on additional packing capacity, upgrading product lines or expanding into new markets.
“Slaughter capacity is already at a premium during peak production periods and any change in line speed waivers could pose a significant challenge for the industry,” McCracken says. “Given projected production growth, the industry will need to consider how it will meet capacity needs and weigh whether it will rely on existing infrastructure with modifications to adjust for growth. Given the lengthy process of permitting, construction, and market development – we would expect packers to weigh these considerations in the coming year.”
4. How will global trade restrictions affect pork exports?
“Global trade flow restrictions are not likely to ease in the coming years. As EU pork production and exports are sliding lower, global pork imports have become more heavily reliant on producers outside of the EU, including the U.S.,” says Brian Earnest lead economist, animal protein at CoBank. “While U.S. pork exports are diversified, there remains a high degree of reliance on the top trade destination, Mexico, and it seems there will be less certainty around barriers to trade in 2025 vs. 2024.”
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