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Pork producers expected to respond to high global prices

USDA now forecasting pork production next year will increase 3.5% above 2019.

The U.S. Department of Agriculture, in its most recent “Livestock, Dairy & Poultry Outlook,” suggested that U.S. pork producers will respond to anticipated higher international pork prices brought about by hog losses in China from African swine fever (ASF) by accelerating farrowings in late 2019 and in 2020. As a result, U.S. commercial pork production in 2020 is likely to increase to about 28.3 billion lb., 3.5% above projected production this year, USDA said.

“Prices of live equivalent 51-52% lean hogs are expected to average about $60/cwt. in 2020, more than 10% above average price forecasts for this year and over 31% higher than hog prices averaged in 2018,” USDA economist Mildred Haley noted.

U.S. pork exports next year are anticipated to be about 6.7 billion lb., almost 7% above export volumes estimated for 2019. This, Haley said, implies that 23.6% of U.S. commercial pork production next year will probably be exported, compared with 22.9% this year.

Haley did say the forecast assumes that current trade policies will remain in place for the forecast period.

Additionally, she pointed out that, despite large export increases next year, per capita disappearance will, in all likelihood, increase as well. USDA currently forecasts per capita disappearance in 2020 to increase by more than 1% to about 52.9 lb. per person, compared with the forecast of 52.1 lb. for this year.

According to Haley, USDA’s Economic Research Service composite pork retail value is likely to increase almost 2% in 2020 to average in the low $3.80s/lb.

“Increased per capita disappearance, accompanied by year-over-year higher retail prices, suggests increased retail pork demand,” she said. “Forecasts for continued economic growth of the U.S. economy next year accommodate increased consumer demand for animal proteins.

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