Pork production to increase in 2017
Expanded farrowings and continued strong increases in litter rates are expected to drive U.S. pork production in 2017 to nearly 26 billion pounds, a 2.6 percent increase over production this year. Prices of live equivalent 51-52 percent lean hogs are expected to average $42-$46 per cwt in 2017.
These hog prices -- combined with 2016\2017 feed costs that are forecast to average $3.05-$3.65 per bushel for corn and $300-$340 per ton for soybean meal -- will likely challenge many hog producers in covering production costs for most of next year. Exports in 2017 are expected to be 5.3 billion pounds, about 2 percent above exports this year.
A weaker U.S. dollar will enhance competitiveness of U.S. pork in foreign markets, particularly in Asia. Pork imports in 2017 are likely to be about the same as this year, 1.1 billion pounds, while live swine imports from Canada are expected to increase by almost 3 percent. However, these imports from Canada will be limited by constraints on expansion, particularly in Western Canada.
Retail pork prices next year will be pressured by larger animal-protein supplies, not only of pork products, but of meats that compete with pork in domestic consumers’ food budgets; beef and poultry production are also expected to increase in 2017. The ERS retail pork composite is expected to average in the mid-$3 region next year, down about 4 percent from the retail composite forecast for 2016.
In the first 4 months of 2016, most hog operations likely did not do as well as a year ago: January-April hog prices averaged $45.46, 4.6 percent lower than in the same period last year. On the other hand, it appears that wholesale pork demand increased in the first 4 months of 2016.
Through April, estimated federally inspected pork production was about 8.2 billion pounds, almost the same as a year ago. The wholesale value of January-April production averaged $76.20 per cwt, almost 5 percent more than in the same January-April period a year ago. In effect, this year, the wholesale market valued roughly the same volume of pork 5 percent higher than a year ago, suggesting that wholesale demand increased. Year-overyear lower hog prices and higher wholesale values imply a greater gross packer spread than a year ago.
March 2016 pork exports were 453 million pounds, almost 3 percent above a year earlier. Larger exports in March contributed to the year-over-year increase in export volume for the first quarter: 1.2 billion pounds, 5 percent more than the first quarter of 2015. The 10 largest export markets for U.S. pork in the first quarter, along with unit values and trade shares, are listed below.
U.S. exports to China\Hong Kong continue to run well ahead of the same period last year. China has increased imports this year to relieve high pork prices brought about by reduced domestic pork production. Chinese customs data indicate that most imported pork is sourced from the European Union, likely due favorable exchange rates and European production practices that prohibit ractopamine usage. With a recently lower-valued U.S. dollar, and increased ractopamine-free pork production, U.S. pork exports to China are increasing.
