Hog prices improve on strong export demand

Both farm level and wholesale hog and pork prices averaged about $20 per hundredweight (cwt) higher than last year in the first quarter of 2011. Higher prices were recorded in spite of larger pork supplies.

The estimated commercial hog slaughter was near year-ago levels, while pork production was up almost 2 percent because the average hog carcass weights increased from 204 to 208 pounds.

Interestingly, higher weights occurred in spite of an 85 percent increase in corn prices compared to the first quarter of last year.

Higher hog prices are being fueled by a robust export market for pork and some improvement in domestic demand.

The U.S. Department of Agriculture is forecasting about a 7 percent increase in pork exports for the first quarter of 2011 and more than a 10 percent increase for the year. Actual pork export numbers for January (the latest month for which data are available) posted a 17 percent increase.

Leading U.S. export markets for pork include Japan, with 30 percent of the market, followed by Mexico at 24 percent, Canada with 10 percent and South Korea about 5 percent.

In January, pork exports to Japan were up almost 23 percent from last year. Pork exports to Mexico were unchanged, Canada down 5 percent and South Korea up a whopping 144 percent. South Korea’s worst foot and mouth disease outbreak in history resulted in the depopulation of about 30 percent of the 10 million head swine herd. Pork is the leading meat consumed in Korea, so more pork imports were required to offset the decline in domestic production.