December 19, 2013
US recordsstrong increase in hog pricesin 2013
The US pork industry recorded strong increases in over-year hog prices in the fourth quarter of 2013 and 2013 overall, as hog slaughter slowly declined, according to USDA''s Economic Research Service Livestock Dairy and Poultry Outlook.
Based on 1.4% lower projected commercial hog slaughter, commercial pork production is forecast at 6.3 billion pounds, almost 1% higher than a year ago.
Lower fourth-quarter hog slaughter is expected to be more than offset by 2.4% increase in over-year average dressed weights. Fourth-quarter prices of 51-52% lean hogs are projected to average US$62-63 per hundredweight (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 hogprices.
Higher hog prices may also be due to strong demand. 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.
In 2014, commercial pork production is forecast at 23.9 billion pounds, an increase of more than 3% over 2013. Hog prices are expected to average US$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 US$3.80s per pound.
Porcine epidemic diarrhoea virus (PEDV) remains a significant threat to the US pork industry at present and moving into 2014. The December 27 Quarterly Hogs and Pigs report may help determine the effects of the disease as of December 1, 2013.