The US pork market shows resilience

July 10, 2023

3 minute read

The price of U.S. pork hit over $1.00 lean last week and cut carcasses closed at $1.08 pounds on Friday. To keep in context, this April 24 Iowa Minnesota price was 67.44 and last Thursday $1.00.61 lbs. An increase of $65 more per capita. The first time the price has crossed $1.00 since last October. In the last 8 months a lot of red ink. At $1.00 some manufacturers won’t lose any money.

Other comments

• U.S. sow slaughter in recent weeks has averaged more than 65,000 per week. It tells us that the liquidation continues. We calculate that anything well above 58,000 per week is a clear sign of dwindling sow herds.
• Iowa S. Minnesota slaughter weights continue to decline last 276.7 lbs, week before 277.5 lbs, year ago 279.1 lbs. We believe that when you consider that it hasn’t been as hot as a year it makes a difference of 2.4 lbs. it is quite significant. It seems that the dynamics of producers and packers are driving the pigs to be pulled forward.
• The National Corn Price Index at the end of last week was $5.28 bushels. The lowest average price since the fall of 2021 (nearly 2 years). Lower feed prices will lower breakevens for pig producers.

September corn futures closed at $4.87 bushels on Friday. The lowest September futures have been since October 2021. It is raining in many areas, there is a huge crop planted and there are moderate temperatures for pollination in many areas.

There is a saying that the surest cure for high prices is high prices. It appears that high corn prices have led to huge corn plantations in the United States and Brazil. More supply leads to lower prices. Brazil last week for example, Dourados $3.82 bushel, Rondonpolis $3.71 bushel, Barreiras $4.31 bushel. No wonder US corn exports are down. It’s not hard to believe that lower prices in Brazil will keep downward pressure on US corn prices.

• Germany was once the third largest pig producing country in the world. The per capita consumption of pork is over 90 lbs. Each.

The latest German inventory indicates 20.7 million (1990 30 million) per head, down 7.3% (-1.62 million) compared to a year ago. In the last 6 months -651,000 of the 1.62 million indicating ongoing liquidation despite profitable markets.

The current German price of 2.50 euro/kg is the highest ever recorded. PSA issues, animal welfare, regulations, labor issues, (small) business scale, environmental regulations, etc. appear to exert pressure on maintaining production. As German production decreases, there is less EU pork production and less EU pork for export.

The National Pork Board makes a positive move

We have long believed that as an industry we must produce a better pork eating experience for consumers. Taste is the most important dynamic for repeat consumer business.

Therefore, we are delighted that the National Pork Board under the new leadership of David Newman as Senior Vice President on ways to increase the demand for pork in the domestic market.

Hopefully they will save a lot of time and money by seeing the obvious. Pork with little marbling and water holding capacity will never offer a good dining experience.

The newly created Task Force Loin Complex should do taste tests. The results will be evident. Lean European-derived genetics in this market will never deliver a good dining experience. How many producers who use these genetics eat them themselves? As a producer, when you go to a restaurant do you order a Pork Chop or a Steak? Why? From our experience pork chops disappoint too often and then we get upset about the short-term thought process of our industry. Taste is what drives demand. If every American eats pork one more time a month, that’s 7 million more pigs a year. This is the real question not chasing a niche.