In the fourth quarter of 2013 and 2013 overall, the U.S. pork industry recorded strong increases in year-over-year hog prices as hog slaughter slowly declined, according to Monday’s USDA’s Economic Research Service Livestock Dairy and Poultry Outlook.
Commercial pork production is forecast at 6.3 billion pounds, almost 1% greater than a year ago, based on 1.4% lower projected commercial hog slaughter.
Lower fourth-quarter hog slaughter is expected to be more than offset by 2.4% increase in year-over-year average dressed weights. Fourth-quarter prices of 51-52% lean hogs are projected to average $62-63/cwt., almost 7% above prices a year ago, the USDA report said.
Analysis of hog prices suggests that demand for hogs is price-inelastic, meaning that small reductions in hog slaughter bring about proportionally larger increases in hog prices.
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Strong demand may also be contributing to higher hog prices. Case in point, retail pork prices for 2013 have been setting records since the first half of 2013, the same time that pork disappearance is expected to average almost 3% above the same period in 2012.
Next year, commercial pork production is forecast at 23.9 billion pounds, an increase of more than 3% over 2013. Hog prices are expected to average $59-63, more than 5% below 2013 prices, depressed by larger production.
With 2014 pork exports forecast at 5.18 billion pounds, domestic product disappearance is expected to be more than 2% above 2013. Retail pork prices are forecast record-high in 2014, in the mid $3.80s per pound.
Porcine epidemic diarrhea virus (PEDV) remains a significant threat to the U.S. pork industry at present and moving into 2014. The Dec. 27 Quarterly Hogs and Pigs report may help determine the effects of the disease as of Dec. 1, 2013.
To read the full report, go to www.usda.gov and click on agency reports.
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