U.S. Pork Producers Remain Cautious Despite Good Returns


By Jennifer Shike, FarmJournal's Pork

July 29, 2022


As inputs and health challenges continue to take their toll, U.S. sow herd expansion remains on hold for most, Rabobank says in its Global Pork Quarterly Q3 report. In USDA’s latest Hogs and Pigs report, the U.S. sow herd was 0.8% below year-ago levels at 6.2 million head.


“High raising costs, limited incremental harvest capacity and the ongoing regulatory overhang have kept expansion on hold,” says Christine McCracken, executive director and senior animal protein analyst at Rabobank. “Continued hog market strength and recent declines in building and feed costs may lead to gradual expansion in early 2023, but not earlier.”


Producers are indicating lower farrowing intentions in the second half of 2022 and no change in productivity, she notes. That, combined with the announced 2023 closure of the Farmer John plant due to high operating costs leads Rabobank to believe that production growth will remain constrained in the near future.


Consumer Demand Still Good


One of the bright spots continues to be consumer demand. Pork demand remains resilient due to its position as a mid-cost protein. 


Pork values are flat with year-ago levels, McCracken says, but they remain volatile with wide weekly swings of 8% to 15% in ham and belly prices. Retail sales volumes are 8% to 10% lower MOM on average are offset by a 15% MOM increase in sales value.


Stronger sales at retail reflect a shift to more in-home eating and a move away from foodservice, although sales to quick service restaurants remain steady. Strong prices also reflect a 2.9% year over year drop in pork production year to date and some pork prices benefit from high-cost competing proteins,” McCracken says.


Meanwhile packers continue to struggle, the report says, as high operating costs and pork prices have not kept pace with underlying hog markets.


A Weak Outlook ...


more, including link to Rabo report