Global Pork

The pork market first half of this year is on a roller coaster with ups and downs, twists and turns. This year began with futures approaching record levels and cash offerings doing the same. Futures prices are still well above the 2022 break-even forecast level, but there are some signs that they have reached their traditional highs for the year. This market Intel is working on supply and demand factors, current global events, and other topics that impact wildrides that represent the outlook for the 2022 pork market.

Price

Pork lean futures fluctuated in the second quarter of 2022. The August leanhog deal rose from $ 95.95 / cwt in February to a high of $ 123.44 / cwt on March 31st. Futures have fluctuated from March highs, but rose in July, with August contracts settled at $ 109.30 / cwt on July 11. Cash prices were strong in 2022, with average base carcass prices well above the five-year average. Figure 1 shows the national weighted average base price of pig carcasses paid by processors between January 2021 and June 2022. Prices paid to carcasses in January were close to the five-year average and rose in the first half of 2022.

Related article: Rising food and energy cost increased world trade $1 trillion but volumes are down.

Supply

USDA publishes a quarterly report called the Quarterly Pig and Pig Report. This report provides a detailed inventory of each breeding and marketing pig in the 16 largest pig-producing countries, accounting for nearly 95% of the total herd in the United States. In addition to these 16 states, the report also estimates the total for all other states. The June 29 report is consistent with analyst polls, confirming that the pig industry is shrinking. The report rated all US pigs and pigs on June 1st at 72.5 million, a 1% decrease from June 1, 2021 and a slight decrease from March 30, 2022. Inventories of pigs on the market totaled 66.4 million, down 1% from last year and slightly down from the previous quarter. The number of pigs retained for breeding was 6.17 million, a decrease of 1% year-on-year, but a gradual increase of 1%. Breeding resources have increased in four states: Iowa, Missouri, South Dakota, and Texas. Casualties occurred in nine states. Pig yields from March to May 2022 were 32.9 million, down 1% from 2021. The number of sows delivered in the quarter decreased by 1% from 2021 to 2.99 million. These sows make up 49% of the breeding population in the United States. From March to May, the average number of pigs per litter was 11, a slight increase from 10.95 last year. Figure 2 shows the US population of all pigs and pigs (millions) from June 1, 2013 to 2022. The total pig and pig populations on June 1, 2022 have fallen by nearly 7% from the record 77.6 million in 2020. Reducing breeding resources is especially important as it will contribute to future pig supply.

Global Pork Production
Global Pork Production

Pig production cycle

Like the cattle cycle, the pig farm has a production cycle. The pig cycle is the expansion and contraction of a herd of pigs in response to economic changes in the business. If the pig is profitable for a period of time, the farmer will increase production and benefit from increased profitability. During the expansion, farmers withhold young sows (pigs), increasing postpartum pig yields. Ultimately, supply from expansion will cause prices to go down. When prices go down, farmers respond by reducing production or withdrawing from the pig business. More sows are slaughtered and the expansion of the pig cycle ends. The shape of the inventory helps to see where the farmer is in this cycle. Figure 3 shows the US inventory of all pigs and pigs from 1974 to 2022 on March 1st. An example of a pig cycle is also included. Cycle lengths vary, but usually last 3-5 years. This is due to several factors. First, farmers need a reason to change production. This is usually due to changes in profitability. Second, the pig life cycle on the market is 9-10 months. This is the time from conception until the new pig reaches the market weight (280 pounds). When profitability was low in 2019, farmers decided to cut production. This decision increased slaughter in 2020 by 10.2%. The piglets in the reduced breeding herd reached market weight after 9-10 months, resulting in a smaller herd. This contraction phase of the cycle exists from a record 77.6 million head inventory in 2020. Figure 3 shows the US inventory of all pigs and pigs from March 1, 1974 to 2022. Cycle lengths vary, but usually last 3-5 years. This is due to several factors. First, farmers need a reason to change production. This is usually due to changes in profitability. Second, the pig life cycle on the market is 9-10 months. This is the time from conception until the new pig reaches the market weight (280 pounds). When profitability was low in 2019, farmers decided to cut production. This decision increased slaughter in 2020 by 10.2%. The piglets in the reduced breeding herd reached market weight after 9-10 months, resulting in a smaller herd. This contraction phase of the cycle exists from the record inventory of 77.6 million in 2020.

Slaughter

Pig slaughter fell below 2021 levels in most of 2022. Figure 4 shows the weekly slaughter of government-controlled pigs in 2021, 2022, and 5-year averages. The slaughter was also below the five-year average for most of the year. The number of slaughtered animals in the week that ended on July 8 was 1.98 million. At the moment, it is 67,000 more than last year.

Demand

Demand for pork at both global and national levels faces obstacles, but continues to be strong. Food costs are rising for US consumers, and USDA predicts that per capita meat consumption in the US will decline slightly by 2022. According to the report, the total amount of refrigerated lean meat on May 31 was £ 1,087 million, a slight decrease from April but a 20% increase over the previous year. Pork accounted for £ 543.07 million, down only 2% from last month but up 17% from the previous year. Monthly changes are small, reflecting seasonal declines in demand during the barbecue season. For more information, see the latest Market Intel on Cold Storage.

Globally

The first case of African swine fever (ASF) in China was recorded on August 3, 2018. ASF is currently found in commercial pig herds in Germany and northern Italy, approaching France and the Netherlands. Since 2014, the disease has been detected in 16 European countries, paralyzing exports from Europe. Pork prices were exacerbated by Russia’s invasion of Ukraine and rose with production costs. This creates an incentive to look for alternative pork supplies in many countries, especially Europe. The ASP has also been found in the Dominican Republic and Haiti, just 85 miles from the Federal Republic of Puerto Rico. The USDA Animal and Plant Health Inspection Service is committed to keeping the disease away from the United States. Recently, USDA’s Agricultural Research Services announced that vaccines are one step closer to approval for commercial distribution. The discovery of ASF in US soil will be devastating. The arrival of the virus will initially suspend the pork trade between the United States and other countries. History is that localization, assessment of animal disease status in specific zones, and management of products entering and exiting zones, until USDA implements control measures that have proven effective in spreading the virus. It suggests that the United States will not allow exports. The two most likely causes of this disease in the United States are animal feed and human food grown or produced in areas where ASF occurs. ASF is a highly resilient virus that can survive up to 30 days in feed and food. The United States is home to more than 6 million wild pigs, which unfortunately is a convenient way to spread the virus.

Related article: Swine fever in North Germany raises fears

Exports

Global pork prices are in the limelight, raising questions about the pork market. With soaring domestic prices, it is tempting for countries to look for pork elsewhere. All major pork exporters except Brazil are expected to reduce pig herds by the end of 2022. US pork exports are projected to fall 4.3% to £ 6.75 billion in 2022, but still 6.7% above 2019 levels. According to the USDA Foreign Agricultural Administration’s July 8 Export and Sales Report, total weekly exports of US pork leanbones were 192,400 tons, down 7% from this time last year. Mexico is the major importer of 486,000 tonnes, followed by Canada with 403,000 tonnes and Japan with 253,000 tonnes. Exports need to be improved to meet the USDA estimate. China has so far stopped buying US pork in 2022. When the Chinese herd was devastated by ASF in 2018, they imported more US pork. Imports continued to flow into the country as Chinese herds of pigs began to recover. Figure 5 shows China’s total imports of US pork from 2018 to 2022. Figure 5 shows that US pork imports increased by 193% between 2018 and 2020, with a clear oversupply of pork in China. As a result, pig prices fell in late 2021, and China delayed imports and pushed up domestic pig prices. China also addressed this issue by raising tariffs on US pork from 8% to 12% in January 2022. China does not provide detailed data, but sources show that pig prices are rising again and demand is rising. If this price increase continues, China could become an export market player in the fall of 2022.

Input Costs

The price of cash pigs is rising and the production cost is also rising. Inflation plays a major role in the current outlook for pork, especially in terms of break-even prices for producers and food costs for consumers. The belly and ham are currently experiencing the greatest increase in value. The break-even price is the price that a farmer or rancher must receive for a product that covers production costs. Feed-related and non-feed-related input costs push up the break-even point. Feed costs include corn, soybeans, dried grains, other feeds, and feed ingredients used in commercial pig feeds. Non-feed costs include items such as operating interest and expenses. As a result, pig farmers’ profits have not increased at current prices.

Source

Please disable your adblocker or whitelist this site!

Ads Blocker Image Powered by Code Help Pro

Ads Blocker Detected!!!

We have detected that you are using extensions to block ads. Please support us by disabling the ads blocker and whitelist the site.

Powered By
Best Wordpress Adblock Detecting Plugin | CHP Adblock