US pig population and China output create economic surplus

May 24, 2012 12:00 AM

The heaviest and most numerous US pig population on record and rebounding Chinese output are creating a surplus that is poised to halt a four-year rally in prices, reports Meat Trade News daily.
US farmers will raise 117.1 mm pigs this year, the most in at least a half century, as world pork output gains 2.7 % to an all-time high of 104.4 mm tons, US Department of Agriculture estimates show.

China may produce 690 mm hogs, the most since at least 1976. Prices may drop 10 % to 77.75 US cents a pound in Chicago by Dec. 31. Futures doubled in the past 30 months, and surging pork costs drove Chinese food-price inflation to 14.8 % in July, more than twice the average over the past decade, data from the state-owned China Economic Information Network show.
US retail bacon reached a record $ 4.84 a pound in June, a 34 % gain in two years.

Farmers responded by producing more, and carcass weights reached a 10-year high in April, generating a surplus of meat that will swell global stockpiles to the largest in five years, the USDA estimates.
“There’s plenty of pork,” said John Nalivka, a former USDA economist and the president of Sterling Marketing, an agricultural economic research and advisory company in Vale, Oregon. “We’re not running out of hogs.”

Global pork production will exceed demand by 577.000 tons this year, the most since 1983, bringing stockpiles at the end of the season to 815.000 tons, USDA estimates show.
The department raised its forecast for Chinese output by 320.000 tons to 51.6 mm tons on April 17, implying a 4.2 % increase year-on-year, after a 3.1 % decline in 2011. While Chinese pork imports will drop 14 % to 650.000 tons this year, shipments will still be the third-highest on record, USDA data show.

The decline in US cargoes to the Asian nation that drove February exports to a seven-month low will most likely be temporary, said Brett Stuart, the co-founder of Global AgriTrends, a Denver-based meat research company.
The US will sell 373.000 tons to China this year, compared with 370.000 tons in 2011, when shipments doubled, Global AgriTrends estimates. China imported 146.475 tons of pork in the first quarter, more than twice the amount a year earlier, customs data show.

The country will consume almost 52 mm tons of pork this year, the most since at least 1975, USDA data show.
Demand has been increasing by about 1 mm tpy over the past decade, equal to an extra 11 mm hogs, “a very big challenge” to meet without imports, Stuart said.

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