It was good to see so many pork producers and pork industry associates at the National Pork Industry Conference (NPIC) in mid-July. Compeer’s chief diversified markets officer, Mark Greenwood, and I had a great discussion following the meeting about the young industry leaders in attendance. We believe the future will be strong with the next generation leading the way.
We also reflected a bit on history at NPIC, and all the work done by producers, veterinarians, allied industries and state and national producer organizations to build the industry to where it is. We know this is an ever-changing landscape and the future will continue to have challenges in front of it, but it is from a solid foundation that it will be able to move forward.
Innovation and Growth in the Marketplace
Innovation over the last few decades has positioned the U.S. to be competitive in every aspect of production -- now leading the world in that regard. A coordinated effort of genetic improvement, meat quality evaluation, nutrition and management strategies to maximize potential, combined with packer-processing innovation, it’s no wonder the quality of product we produce has improved tremendously over the years.
The work that has gone into building our pork exports is evident in the opening of new trade agreements and in the promotion of pork in those markets over the years. It’s incredible to think that 25 years ago we became a net exporter of pork for the first time. Today, we are approaching 30% of total production being exported.
Strong Demand Continues
I believe many opportunities have brought us to where we are now. Pork product prices have continued to be quite strong in recent months, maintaining positive margins for pork producers. Robust pork demand, particularly for loins, hams and bellies, have provided producers with prices that outpace very high costs of production.
For the last week of July in 2021, hog prices, based on the Net Negotiated Market, was $108.88 and cutout averaged $123.83. Pork primal belly, ham and picnic were all at 12-month high levels driven by demand for product and a limited supply. With somewhat limited exports at this time due to China, it is clearly being driven by domestic demand for pork.
The markets have received some help from smaller supply due to a reduced breeding herd and disease challenges from PRRS. It is interesting to look at pig harvest from March 1 to July 31 and compare to the prior two years. When comparing to 2019, we have nearly the same production and clearly much better prices.
Average Weekly Pig Harvest | |||
| 2019 | 2,373,666 head | ||
| 2020 | 2,369,294 head | -0.2% | |
| 2021 | 2,381,415 head | +0.5% | +0.3% compared to 2019 |
Source: Kent Bang, Compeer Financial
Up to the Challenge
The pork industry will continue to have opportunities and challenges. Improving herd health, controlling costs and managing price risk rank among the highest. Another challenge will be doing a better job of telling the story of animal welfare, food safety and quality, and sustainability of the pork sector. I believe the next generation of leaders is up to the challenge to build the industry stronger on those pillars.
More from Kent Bang:
Control the Rising Cost of Production
