Despite enormous 2020 hog numbers, hog prices likely will average slightly more than last year because of strong domestic and international consumer pork demand, the USDA’s Economic Research Service said in its monthly Livestock, Dairy, and Poultry Outlook.
Domestic consumers were expected to have abundant pork supplies this year as per capita disappearance was expected to increase almost 4%, along with strong demand from export markets, the report said. This was expected to result in flat per capita pork disappearance with retail prices slightly above year-earlier levels.
EXPORT DEMAND SEEN HIGHER
Hog prices in 2020 could be supported by exports, with important demand increases coming from China, where the swine herd has been reduced dramatically by African Swine Fever.
China recently stepped up its purchases of US pork products, mainly frozen carcasses, in part, to re-employ some of the labor released from Chinese processing plants affected by reduced hog numbers. China also bought an unidentified pork category termed “meat of swine, except processed, not elsewhere specified or identified.”
Those were among the factors prompting an increase in the 2020 US pork export forecast to about 7.4 billion pounds, more than 17% more than exports in 2019.
STRONG FINISH TO 2019 PORK EXPORTS
December US pork exports were 681 million pounds, more than 29% more than a year earlier, largely because of strong shipments to China\Hong Kong and to Mexico. Exports to China\Hong Kong were almost six times more than last December, and shipments to Mexico were more than 7% more.
Notable in 2019 were major reductions in the shares of US exports by Japan, Mexico, Canada and South Korea, although China\Hong Kong’s share increased significantly — from 6.5% of exports in 2018 to almost 34% in 2019.
2020 PORK PRODUCTION SEEN HIGHER
Larger-than-expected numbers of slaughter-ready hogs through the first week of February, prompted significant increases in the first-quarter 2020 pork production forecasts. Estimated federally inspected hog slaughter in January was roughly 11.8 million head, 7.3% greater than a year ago.
The estimated January slaughter yielded a larger-than-expected estimated pork production volume of about 2.5 billion pounds. Heavier dressed weights also contributed to this volume that was 7.7% more than production in January 2019.
The larger production volume necessitated an upward adjustment of the first-quarter pork production forecast to about 7.3 billion pounds, 6.5% more than a year ago.
YET PRICES SEEN HIGHER
Quarterly hog prices were expected to run higher in 2020, with the exception of the second quarter prices. The year’s average could be slightly more than the 2019 average.
First-quarter prices were expected to average $44 per cwt, about 8% more than a year ago. Second-quarter prices could average about $51 per cwt, 12% lower than the 2019 quarter.
Third-quarter hog prices were expected to average $54 per cwt, almost 8% more than in 2019, and fourth-quarter hog prices could average about $46 per cwt, almost 7% more.
CATTLE, BEEF RECAP
Cash cattle traded this week at $115 to $119 per cwt on a live basis, down $1 to $4 from last week and at $186 to $187 on a dressed basis, down $3.
The USDA choice cutout Thursday was down $0.80 per cwt at $205.54, while select was up $1.09 at $199.69. The choice/select spread narrowed to $5.85 from $7.74 with 156 loads of fabricated product sold into the spot market.
No futures contracts were tendered for delivery Wednesday against the Feb futures contract.
The CME Feeder Cattle index for the seven days ended Wednesday was $138.04 per cwt, down $1.57 from the previous day. This compares with Thursday’s Mar contract settlement of $132.57, down $1.50.