Second-Half 2021 Pork Production & Pork Exports Forecasts Reduced, Pork Price Spreads Narrow

The U.S. Department of Agriculture's Economic Research Service’s September Situation and Outlook Report shows 2021 year-to-date retail pork prices covering January to August were up 30 cents over 2020 averages, reaching $4.33 per pound. Wholesale and average farm values for pork were also up, but Q3 and Q4 2021 pork production forecasts were reduced by 80 million and 5 million pounds, respectively, due to continued lower hog slaughter and dressed weight expectations. Pork production for 2021’s entirety is forecasted at 27.7 billion pounds, nearly 2% lower than 2020.

Pork Production Projections

Q3 2021 pork production is forecasted at nearly 6.5 billion pounds, more than 7% less than the same period in 2020. The Q4 2021 pork production forecast was reduced to 7.3 billion pounds, down nearly 3.5%. The report points out that the Q3 2021 forecasted price for 51 to 52% lean hogs of $78 per hundredweight (cwt) is up nearly 93% from a year ago (although unchanged from the previous month), and Q4 2021 hog prices are expected to average $65 per cwt, a dollar higher than the previous month’s forecast and 28% over Q4 2020 prices.

Second-Half 2021 Pork Exports

The forecast for second-half 2021 pork exports was reduced by 75 million pounds due to lower expected shipments to China and Hong Kong, although total 2021 pork exports are to increase 1% over 2020 and reach 7.334 billion pounds. Q3 2021 exports were reduced by 50 million pounds to 1.575 billion pounds, and Q4 2021 exports are forecasted at 1.925 billion pounds, 3.6% higher than 4Q 2020 but 25 million pounds down from the previous month’s forecast. Exports forecasted for 2022 remain unchanged from the previous month at 7.3 billion pounds, down about 0.5% from the 2021 forecasted volume.

During July 2021, pork exports slipped 8.5% from a year ago to 508 million pounds. Although exports to most major markets were up, they couldn’t offset lower shipments to China and Hong Kong (down 46%). Among major export markets other than China and Hong Kong, only exports to Canada were also lower. That’s due in part to increased Canadian pork production, up nearly 1% through September’s first week.

Pork Processing Labor Woes

The report also illustrates the impact that labor reallocations related to increased daily capacity at processing facilities from 2017 to 2019 in combination with pandemic-related work absences and reductions have had in causing wider price spreads between labor-intensive boneless pork cuts and less labor-intensive bone-in pork cuts. Although the spread decreased nearly 46% from late December 2020 to late April 2021 as COVID-related absences declined and hog slaughter numbers declined seasonally, it increased by more than 67% from mid-July to August’s end, likely due in part to the Delta variant causing greater workforce absences.

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Source: USDA