Steiner and Company produces the Profit Maximizer report on behalf of National Pork Board based on information we believe is accurate and reliable. However neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.
Highlights
- The pork market continues to trade sideways on ample supply and, more importantly, a weaker than expected demand across a range of items.
- We urge caution about current price trends, however, as producers are becoming increasingly current, and supply will trend lower into March and April. Current prices are attractive for retailers and should result in higher features this spring.
- Pork belly market has been under a lot of pressure given the supply of product already in the freezer and higher than expected supply so far. Prices should see a step up in Q2, especially with more chicken sandwich promos in the pipeline.
- Ham primal value is currently trading near year ago levels, but the difference is that bone-in hams now command a premium (export demand) while boneless hams are lower.
Full Report
Domestic Pork Supplies Remain Plentiful, Bringing More Attention to Demand Going into the Spring
USDA has been correct in estimating Q1 production above the previous year. The rationale for this was that some hogs which would have been slaughtered in Q4 of 2022 were pushed into Q1 due to winter weather disruptions. Current forecast is for Q1 pork production to be up 1.5%. As for Q4 production USDA is holding to its estimate for a 4.3% increase. The rationale for this is that the comparison to Q4 of 2022 will be skewed by those delayed hog marketings last year.
Currently USDA thinks that commercial pork production in 2023 will be 440 million pounds (+1.6%) higher than the previous year. Per capita pork supply in the domestic market is forecast to remain the same from the previous year at 51.1 lb./pp retail weight. That’s because the increase in domestic production is expected to be offset by lower pork imports, currently forecast down 339 million pounds (-25%). Add to this the normal increase in population and per capita supply is the same, but on the higher end of the range for the last +20 years.
Demand will remain the focus for market participants, especially as it appears that so far in Q1 it has been quite underwhelming. Pork demand in the last two years was stellar. However, how much of that was due to pent up demand during COVID and high price of competing proteins? Judging by how futures are trading, it appears market participants for the moment have made some significant adjustments to their demand expectations for 2023.
U.S. Pork Exports in 2022
Mexico Major Driver for U.S. Pork Exports
U.S. pork exports in December were 190,664 MT (fresh, frozen, cooked). That is 9,689 MT or 5.4% higher than a year ago. Mexico has become by far the biggest market for U.S. pork and that was the case in December as well. Shipments to this market were 78,404 MT, 9.7% higher than the previous year, accounting for 41% of all exports. For the year Mexico represented 39% of U.S. pork shipments compared to 31% a year ago.
Increase in U.S. Pork Exports to China
China was a much smaller market for U.S. pork in 2022 than in 2021. Its total exports for the year at 196,330 MT, 50% smaller than the year before. Chinese pork imports in 2022 were down from all countries due to increasing domestic supplies and lower prices in the domestic market. Shipments to China in December were 20,024 MT, up 54%. The hope/expectation is that U.S. pork exports to China will increase in 2023. That is in part due to incremental growth in U.S. pork supplies but also rising pork prices in the EU.
Total U.S. pork exports for 2022 were 2.14 million MT, down 11% compared to a year ago. The value of those exports was $6.4 billion, down $463 million or 6.7% compared to a year ago. The value of pork variety meat in 2023 was a little over $1 billion. That is 5% higher than the previous year. However, it is not enough to make up for the decline in meat export value.
Price Chart
Forecasts
Steiner Consulting Group produces the National Pork Board newsletter based on information we believe is accurate and reliable. However neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.