Pork Profit Maximizer – Retail Edition


US domestic pork availability is burdensome in the near term and hog prices have collapsed as packers struggle to balance the seasonally softer pork demand in late summer with the rapid ramp-up in hog slaughter. Expectations of higher supplies in the fall may have encouraged processors and other end users to deplete inventories. Pork supplies in cold storage at the end of July were 2.5% lower than the previous month compared to a 5-year average drawdown of less than 1%. Last week total US pork production was estimated at 510.2 million pounds, 5.3% higher than a year ago. During the period July 29 – September 1 pork production was a total of 2.516 billion pounds, 124 million pounds or 5.2% higher than the comparable period a year ago. The surge in production is far higher than the +2.5% to +3.0% expected from the June 1 hog inventory survey. Moving this additional supply of pork at a time when end users are looking to deplete inventories and exports to Mexico face a 20% tariff has proved disastrous for hog prices. Hog prices have declined by more than 20% from their early summer peak and are expected to remain well below year-ago levels through the end of the year.