Mexico is buying up U.S. pork at a rapid pace as outbreaks of the deadly porcine epidemic diarrhea virus (PEDV) and porcine reproductive and respiratory syndrome (PRRS) shrink herds throughout the country, Rabobank protein analyst Christine McCracken told Bloomberg.
In addition, soaring grain prices spurred higher by Russia’s invasion of Ukraine, means more farmers are likely decreasing their herd size because of the increased cost of feed, she explained.
The U.S. is shipping record amounts of pork to Mexico, with the country coming in as the top buyer of U.S. pork last week, U.S. government data showed on Thursday.
This is good news for U.S. pork producers, but USMEF economist Erin Borror admits her export outlook is clouded a little by all that’s going on in the world right now.
Maximize the Value of U.S. Pork One Pig at a Time
“I’m still optimistic for US. red meat exports. I still have beef exports setting another record above $10 billion, and possibly nearing $11 billion as long as things don’t go off the rails. On the pork side, I think we can still do above $8 billion. There are a lot of wild cards, especially on the pork side, around not only China, but also what happens in Europe,” she says.
Hog slaughter is running below a year ago. Borror says that is partially due to some productivity issues, but also a lot of producer uncertainty.
“Coming out of not only the pandemic, but also the concerns around African swine fever, what China’s herd rebuild is going to look like, Proposition 12, you name it,” Borror says. “Our hog producers have been cautious. Now you add on some productivity challenges. That decrease in pork output is impacting on the export side, but we’re still exporting a high share of our production historically and adding value.”
The higher input costs, in general, drive the importance of exports even further, she explains. The feed grain base in the U.S. is essential to the livestock industry.
“Exports are all about maximizing the value of every animal we produce. When we know we have higher costs of production, then we need to have higher prices for our product. Exports are absolutely critical for that,” she says. “We know that U.S. feed grain producers benefit from us producing that value-added product and consuming those grain and soy products with our livestock.”
She says that is the country’s competitive advantage worldwide: producing grains in the country, adding value to them in the form of livestock and then maximizing the value of those animals through exports.
“It’s that perfect partnership,” Borror says. “It really sets us apart from pretty much all of our competitors. I mean, you can argue Brazil, obviously a massive feed producer, but we typically don’t compete head-to-head with Brazilian beef and pork. It sets us apart against our competitors in Europe on the pork side, and even Australia on the beef side.”
More from Farm Journal’s PORK:
From All Angles: Food Chain Mandates Threaten Producers, Impact Consumers
China’s Hog Farmers Face Long Slog in Return to Profit
Is a Wreck Coming This Fall? Payne Says Pork Producers Need to Price Ahead
