Hoping for a momentum change in the U.S. pork market
Average pork production in the 12 months through February is up 7.0 percent versus the same 12-month period one year ago; however, pork production in the month of February fell 1.4 percent from the February 2015 level. This is the first month-over-month decline in pork production since late 2014, when a virus swept through the U.S. pork stock, wiping out millions of pigs at farms across the country. Pork production in the three months through February is up a modest 2.2 percent but the quarterly rate of change has steadily fallen since late last summer. Momentum is decidedly negative in the U.S. pork market at the moment.
Fortunately for producers, pork prices are rising again. Live hog cash prices, measured by cash settlement price for Iowa-South Minnesota hogs in dollars per hundredweight, averaged 0.2 percent higher than the 2015 level during the last three months. Prices declined for much of 2015 as U.S. pork supplies rebounded from the 2014 virus-driven shortage. Producers are swiftly passing on these price increases, as the U.S. hog producer price index in the first quarter rose 20.0 percent versus the average prices in the first quarter of 2015. This is not great news for the consumer, who should expect to pay higher prices at the supermarket. But this will offer relief to producers facing a nascent negative trend in overall production volume. NP