Sharp recovery in US production
US production as expected showed a sharp rebound in the first quarter of 2015 as the industry continues to recover following the disease affected year of 2014.
Production was up over 6% compared with both January-March 2014 and 2013. For 2015 as a whole the latest USDA forecasts indicate a rise of 6% to 11.0 million tonnes. The growth in the first quarter was driven by an increase in the size of the breeding herd, recovery in productivity and higher carcase weights. Production was also well above levels seen in the years prior to the PEDv outbreak and this will continue so output in 2015 will be at a record level.
Despite production increasing, US chilled and frozen pork exports actually fell 14% in the first quarter of 2015 to 353,000 tonnes. This was as a result of the current strength of the US dollar reducing the competitiveness of product on the global market. This has been coupled with high levels of exportable supplies from other countries and a weak euro. Latest forecasts for total US pig meat exports in 2015 are unchanged at 2.2 million tonnes carcase weight down 2% on 2014.
As a result of these factors there is more pork on the US market, which is putting pressure on prices which have fallen to well below levels seen in 2014 and 2013. In the week ended 22 April prices for nearby contracts on the Chicago Mercantile Exchange averaged $62.98 per 100lb, almost half the levels seen in 2014 and almost $25 down on 2013. With production expected to remain higher throughout the year and exports forecast to fall there will be little pressure on prices to increase unless domestic demand picks up strongly.