MercoPress. South Atlantic News Agency

Glut of pigs in the US and China posed to halt four-year rally in prices

Global pork production will exceed demand by 577.000 tons, the most since 1983 says USDA

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 million 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 million metric tons, US Department of Agriculture estimates show.

China may produce 690 million 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 dollars 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 Inc., an agricultural economic research and advisory company in Vale, Oregon. “We’re not running out of hogs.”

Prices advanced 2.5% to 86.375 cents on the Chicago Mercantile Exchange this year, still 17% below the 25- year high of 1.0435 reached in April 2011.

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 million 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 U.S. 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 million tons of pork this year, the most since at least 1975, USDA data show. Demand has been increasing by about 1 million tons a year over the past decade, equal to an extra 11 million hogs, “a very big challenge” to meet without imports, Stuart said.