W. Lafayette, IN – Hog and pork markets probably won’t be able to maintain the excitement of this spring when live hog prices reached the mid-$60s in early-to-mid-May. Recent concerns over European debt have caused many markets to be more cautious about world economic recovery and consumer demand. The related strengthening of the dollar has also dimmed prospects for meat exports. Last year demonstrated just how critical a recessionary economy was in weakening pork demand. A more cautious world now likely means some moderation in pork prices from recent lofty levels, but prices are not going to fold either.
The best news is that pork supplies are down and will stay down for the rest of the year. Pork production so far this year has been down four percent, and with population growth and expanded trade, per capita availability has been down about five percent. Per capita supplies should be down near eight percent this summer, then down three percent to finish the year. Limited amounts of pork should help maintain very strong prices, especially through the summer.
There is another problem on the horizon, and that is higher retail prices. Data through April shows that U.S. retailers still had not increased the price of pork to consumers. In the first four months of the year, retailers sold pork five cents per pound cheaper than in the same period in 2009. This means that the sharp increase in the farm level prices this spring are primarily being absorbed by much smaller retail margins. That won’t last. You can bet that retail prices will soar in coming months.
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