Pork Industry Challenges Aside, Grilling Season Was a Blazing Success
Though the animal protein sector faces a number of ongoing challenges, producers transitioned to the first “post-COVID” summer grilling season with blazing success, says Brian Earnest, lead economist, animal protein, CoBank, in the recent CoBank Knowledge Exchange’s quarterly report.
He says inflation will continue to be the top challenge to ongoing strong sales at the retail meat case. In May, retail meat and poultry prices were 18% higher year over year and both spot market supplies and freezer inventories are below pre-pandemic levels. Between tight supplies and consumer demand strength, meat prices were 20% higher than the five-year average for the March-May period.
Unlike other animal protein segments, Earnest says pork industry dynamics have been fairly uneventful in the past few months.
"While prices for many of the main pork categories, such as hams, butts and loins have appreciated in line with expectations, the strong upward rallies witnessed in 2021 have yet to emerge. That said, the wholesale pork cutout price remains well supported, and is averaging 30% above January through June of last year," he says.
In the June quarterly Hogs and Pigs report, USDA estimated total hog supplies at 72.5 million head, a 1% decline from a year ago - for the most part, in line with analyst expectations. Earnest notes the breeding portion of inventory total contracted 0.8% versus last year. Since June 2019, the breeding herd has dropped 2.8%.
"Pork producers remain challenged on several fronts, from animal disease to higher input costs, domestic regulations and shifting export markets," Earnest says.
Mortality rates have moved higher this year, which producers are attributing to porcine reproductive and respiratory syndrome (PRRS). New and evolving strains of PRRS are making it even more challenging to eradicate, he adds.
"Between PRRS, a declining breeding inventory and high feed costs, market hog supplies should be tight well into 2023," Earnest says.
After several years of successful growth spurred on by China's unfortunate outbreak of African swine fever (ASF), U.S. pork exports to China dropped in 2022. U.S. pork exports to all destinations totaled just under 530 million pounds during April, which was down 19% year over year (but roughly in line with the five-year average for the period), he notes. China’s share has decreased significantly in 2022, with U.S. exports to the destination falling from over 160 million pounds per month last year to only about 40 million pounds per month in 2022.
More from Farm Journal's PORK:
USDA's Latest Hogs and Pigs Report Gave Producers A Hint About What To Expect In Q4
Pork Producer Margins This Year Could Rival 2021, CoBank Says
