Pig Prices Fall 44% in a Year

Spend Matters welcomes this guest article by Thomas Reilly of Mintec.

Last September we explored the problems in the US pig market. At that time, US pig meat prices had just dropped off some record highs due to an outbreak of porcine epidemic diarrhoea virus (PEDV). Since then the picture has changed somewhat.

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The record high prices in the US were seen in July 2014 thanks to PEDV, a disease that led to millions of piglets dying and reducing the number of hogs available for slaughter. The crisis in the pig meat industry led to investment from animal pharmaceutical companies to quickly create and introduce vaccines to the market. The introduction of these vaccines was very successful and has had a really positive effect for breeders and farmers around the US. This meant that not as many pigs had to be culled to combat the disease and that the herd size could be built upon rather than reduced.

At the start of April, the pig herd in the US stood at 66m head, 7% higher than a year ago. In addition to the total herd size increase, the breeding herd size is also up on the year. The breeding herd is currently at 5.9m head, 2% up year-over-year. The increase of both of these shows how far the US pig industry has come since the first outbreak of PEDV and, despite large amounts of piglets being culled in 2014, production has still been able to grow. With US production increasing at a rapid rate, it shows the US pork industry means business and is likely to carry on growing.

This availability of pig for slaughter has led to the prices of live-weight pork falling 44% y-o-y. In fact, prices are now lower than in 2013.

On the other hand, demand from China, the biggest producers and consumers of pork in the world, is growing, opening up the possibility that US live-weight pork prices could increase, or at least slow the decrease. China has culled over 6 million sows for consumption, with 1 million being culled in January alone. Even the speed of production expansion in the US isn’t fast enough to fill that size of demand! China is likely to import more pigs, and the US and the EU are the likely producing regions to go to. This could limit price decreases as pig availability falls.

Overall, US pig production is at its greatest level for years and the prices reflect that. It is expected that prices could continue this trend until the Chinese market really opens up for US exporters.

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