Introduction
The pork market in the first half of this year was like a roller coaster with ups and downs and twists and turns. This year, futures trading has approached record levels and cash offerings have begun as well. Futures prices are still well above the 2022 break-even level, but there are some signs that they have reached their traditional highs this year. This Market Intel addresses supply and demand factors, current world events, and other topics that influence the Wild Ride that represents the outlook for the 2022 pork market. Price of lean pork futures fluctuated in the second quarter of 2022. Contracts for pork lean meat in August rose from $95.95/cwt in February to a March 31 high of $123.44/cwt. Futures have fluctuated from their March highs but rose in July, with the August contract settling at $109.30/cwt on July 11th. Cash prices were strong in 2022, with average base carcass prices well above their five-year averages.
Price
Prices paid for carcasses in January were close to their five-year average, rising in the first half of 2022. Supply-Quarterly Pig and Pig Report USDA publishes a quarterly report called the Quarterly Pig and Pig Report. This report provides a detailed inventory of breeding and marketing pigs in each of 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 sum 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.
Supply
Market pig inventories totaled 66.4 million, down 1% from last year and slightly down from the previous quarter. The number of breeding pigs owned was 6.17 million, down 1% year-on-year and up 1% year-on-year. Breeding increased in her four states: Iowa, Missouri, South Dakota, and Texas. Casualties occurred in nine states. From March to May 2022, he had a pig yield of 32.9 million, a 1% decrease from 2021. The number of sows born in the quarter decreased by 1% from 2021 to 2.99 million. These sows make up 49% of the breeding cattle herd in the United States. The average number of cattle per litter from March to May was 11, a slight increase from 10.95 last year. Figure 2 shows the population of all pigs and pigs (million) in the United States from 2013 to 2022 on June 1. The total number of pigs and pigs on June 1, 2022 decreased by nearly 7% from the record 77.6 million in 2020. The reduction of breeding livestock is especially important as it will be responsible for the future supply of pigs.
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Global Events
ASF The first case of African Swine Fever (ASF) in China became documented on August 3, 2018. ASF has now been detected in business hog herds in Germany and Northern Italy and is getting in the direction of France and Netherlands. Since 2014, the ailment has been detected in sixteen European international locations and has crippled exports popping out of Europe. Prices of red meat have improved along fees of production, that have been exacerbated through the Russian invasion of Ukraine. This creates incentive for lots international locations, mainly in Europe, to search for opportunity red meat supplies.
ASF has additionally been detected withinside the Dominican Republic and Haiti, simply eighty five miles from the Commonwealth of Puerto Rico. The USDA Animal and Plant Health Inspection Service, is devoted to preserving this ailment out of the U.S. Recently, USDA`s Agricultural Research Service introduced that a vaccine is one step in the direction of acclaim for business distribution. The discovery of ASF on U.S. soil might be devastating. The arrival of the virus might to start with close down red meat exchange among the U.S. and different international locations.
History indicates that regionalization, comparing animal ailment repute in a specific region and controlling the goods that input or go out the region, might now no longer permit the U.S. to export till after USDA have been capable of show its measures powerful in controlling the unfold of the virus. Two of the maximum possibly reassets to carry this ailment to the Unites States are animal feed and human meals grown or produced in regions wherein ASF is present.
ASF is a completely resilient virus and might live on in feed or meals merchandise for as much as 30 days. The U.S. is domestic to over 6 million feral hogs, an regrettably handy manner for the virus to unfold. Exports Global red meat fees had been a highlight item, including inquiries to the red meat market. Higher home fees have made it attractive for international locations to appearance some other place for red meat.
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All important exporters of red meat apart from Brazil are forecast to lessen hog stock through the cease of 2022. USDA forecasts U.S. red meat exports to lower through 4.3% to 6,750 billion kilos in 2022, nonetheless 6.7% better than 2019 levels. A July eight export income document from USDA`s Foreign Agricultural Service placed general weekly U.S. exports of red meat muscle cuts at 192,four hundred metric lots, 7% decrease than this time final year. Mexico became the main importer at 486,000 metric lots, observed through Canada at 403,000 metric lots and Japan at 253,000 metric lots. Exports will need to enhance to fulfill USDA`s estimate. China has in large part stopped shopping for U.S. red meat to this point in 2022.
When China’s swine herds were devastated by ASF in 2018, they imported more U.S. pork. Imports continued to flow into the country as China’s pig herds began to recover. Figure 5 shows China’s total imports of US pork from 2018 to 2022. As a result, hog prices fell in the second half of 2021, and China slowed imports to boost domestic hog prices. China has also addressed the issue by raising tariffs on US pork from 8% to 12% in January 2022. China has not provided detailed data, but sources indicate that the price of pigs has risen again, indicating an increase in demand. If this price increase continues, China could become an export market player in the fall of 2022.
Inflation plays a major role in the current outlook for pork, especially in terms of breakeven prices for producers and food costs for consumers. Hams are currently the most valuable.The break-even price is the price a farmer or rancher should receive for his product, which covers the cost of production. Feed-related and non-feed-related input costs drive the breakeven point. Feed costs include corn, soybeans, dry grains, other feeds, and feed ingredients used in commercial pig feeds. Non-feed costs include items such as operating income and overhead costs. As a result, pig farmers’ earnings have not increased at current prices.
Summary
Pork prices rose in the first half of the year, with record cash offers. Futures have been volatile, having fallen since mid-June, but recovered somewhat in July. Strong cash and falling futures prices suggest that traditional seasonal highs have been established. Domestically, consumers eat less meat due to rising food prices. US pork exports to Mexico and Canada are booming around the world. At the same time, China is rebuilding its pig population and will not import so much pork in 2022. The combination of these factors has led to more meat being stored in cold storage. The USDA Quarterly Pork Report confirmed further decline in the pork industry. This means farmers are slaughtering more sows and hog yields are likely to decline in the coming days. Appearing in Germany, the ASF continues to threaten herds of pigs around the world, including the Dominican Republic and Haiti, which are too close to the Federal Republic of Puerto Rico to be comfortable. Various USDA agencies are working to prevent ASF from entering the United States.
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