US pig prices hit a five-and-a-half year low earlier this year only 12 months after reaching record levels on the back of a PEDv-inspired depression in output, according to a new analysis by AHDB Pork.
With numbers and weights building again, however, the US is set to produce more pork than beef for the first time ever, prompting AHDB Pork’s headline comment of “what a difference a year makes”.
The question now, of course, is what will happen next.
“Lower pig prices have reduced producer confidence (in the US), although reports suggest that margins are still reasonable, given that feed prices remain low,” said AHDB Pork. “This means that producers are scaling back farrowing intentions, which could limit supplies into next year.
“However, with productivity improving, output may still be level or even slightly higher than this year. As a result, USDA forecasts that prices will remain low through most of next year.”
As for the potential impact on EU producers of rising output in both the US and Canada, the current list of variables includes output, currency and China.
“The increased production and lower prices in North America inevitably creates more competition for EU exporters on global markets,” said AHDB Pork. “To date, the strong US dollar has mitigated this but with export prices having fallen so they are now at similar level to those from the EU, competition is likely to intensify.
“Whether this affects EU prices will depend on how demand develops, particularly in China.”