USDA in its latest outlook for the US pork market slightly lowered its production estimate for 2024, though it still expects output will top last year. While production growth has helped fuel US exports this year, USDA notes that uncertainties in key importing countries could keep a lid on further demand growth.
USDA lowered second-half US pork production by -85 million metric tons (MMT), from 6.835 billion pounds to 6.750 billion pounds, on lower expected third-quarter slaughter and lower weights. Despite the trim, total 2024 slaughter at 28 billion pounds is still up +2.8% compared to last year.
USDA notes that July production was about +2.5% higher than last year due to a combination of higher slaughter numbers and dressed weights that averaged more than +2 pounds above weights last year. Slightly more of the year-over-year production gain was due to higher weights, which USDA says was likely the result of lower feed prices. For what it’s worth, weights in early August were still running about +1.5% higher than last year.
July also marked the first time in 2024 when the average gross processors’ spread dropped below year-earlier levels. Processors were supported somewhat by hog prices that were -12% lower in July, but they were unable to offset the reduction in the average cutout (-10.9%) combined with lower byproduct values – more than -16% below a year ago – that together drove the spread below year-earlier levels.
Meanwhile, weak demand and a strong US dollar continue to weigh on exports. June pork exports were more than -10 below 2023 levels. The declines were led by Japan (down -14% from June 2023) and Mexico (-5%). USDA notes that the higher USD value is making US pork less competitive. This was particularly evident in Mexico, beginning in the late spring.
The good news is that total exports for 2024 are expected to be 7.1 billion pounds, less than initially forecast but still about +4.4% higher than last year. USDA says the reduction reflecting the assumption that demand for U.S. pork by important importing countries will be somewhat slower than initially projected earlier this year. USDA pegs pork exports in the third quarter at 1.64 billion pounds, about +6.6% higher than Q3 2023, while fourth quarter exports are forecast to run around +5% higher than last year at just under 2 billion pounds. If USDA’s estimates are realized, pork exports will account for more than a quarter of commercial pork production this year. USDA’s estimate for 2025 pork exports is about 7.4 billion pounds, +3.4% above projected 2024 exports.
It’s worth noting that the National Pork Producers Council (NPPC) is working to remove some barriers for US pork exports. The NPPC has submitted comments relating to “the Biden administration’s decision to continue Section 301 tariffs on Chinese goods and introduce additional duties on new products.” According to NPCC, US producers are concerned about additional retaliatory duties on U.S. pork exports to China and the impacts they could have on imported US agriculture products.
Also relating to the supply chain, a coalition of agricultural associations including the NPPC has written to the US government, urging the provision of “any and all support” to help those representing East Coast and Gulf of Mexico port workers and terminal operators reach a new labor agreement before the current one expires. About 60% of US pork exports are transported by ocean freight, with nearly 45% being shipped from East Coast and Gulf ports. There were several disruptions in 2014 and 2015 at West Coast ports, which “cost the US meat industry millions of dollars in lost export sales.” (Sources: USDA, Pig Progress, Meat+Poultry)
