Average U.S. pork production during the 12 months through February was 3 percent higher than one year ago. U.S. personal consumption expenditures for pork moved generally lower in recent months as deflation in U.S. consumer pork prices hindered dollar-denominated expenditures. Downward business cycle momentum is evident in broad measures of U.S. consumer markets, such as U.S. total retail sales, which are in a slowing growth trend.
Despite economic headwinds rising domestically, the U.S. pork industry may see some pricing relief due to a widespread epidemic of African swine fever in China, the world’s largest pork consumer, and neighboring countries. As of late April, more than 1 million pigs had been culled to limit the spread of the disease. Most Chinese pork production is for domestic consumption; reduced herd sizes make China increasingly dependent on imports to meet demand. The U.S. is at a disadvantage relative to other pork-exporting regions due to a 62 percent pork tariff that China placed on U.S. imports last year; however, China is buying U.S. pork despite the hefty tariff. The current gap in the global supply and demand of pork is resulting in higher U.S. lean hog futures prices. NP