Unlike pork markets in 2021, when higher prices were largely attributable to pandemic-related changes in consumer demand, this year supply factors appear to be supporting prices of both hogs and pork, USDA said in its August "Livestock, Dairy and Poultry Outlook."
Lower numbers of slaughter-ready hogs clearing the market at higher year-over-year prices, leading to reduced pork supplies with continued sharply higher pork prices, are likely to continue for the balance of 2022, the report from the agency's Economic Research Service (ERS) said.
The July 2022 cutout reached an average value of $120.60 per cwt — the highest level since June 2021 — jumping more than 10% from its average value in June after averaging about $105 per cwt from February through May, the report said.
Lower year-over-year monthly hog slaughter numbers were the most important factor driving January-to-July hog and pork prices, according to the ERS. The lower numbers are in line with information reported in successive Quarterly Hogs and Pigs reports since March 2021.
Although carcass weights have averaged higher since February of this year, lower slaughter numbers kept production below year-earlier levels through April. From May through July, however, higher carcass weights offset lower slaughter numbers, nudging pork production just over year-ago levels, after adjusting for slaughter-day differences.
USDA's forecasts for 2022 pork production and hog prices continue to support the scenario of reduced production and higher hog prices, the report said. In 2023, first-quarter production is expected to increase more than 1% to about 7 billion pounds, with hog prices also rising about 1% from year-earlier prices to $66 per cwt.
Second-quarter production is expected to be lower, based on the 1% year-over-year reduction in producer intentions shown in the June Quarterly Hogs and Pigs report, the ERS said. Second-quarter pork production of about 6.5 billion pounds is anticipated, along with hog prices of $74 per cwt.
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