Prospect of American pork industry in 2003

Lead: while pork prices have been low, U.S pork producers should be pleased by the fact that they may have avoided another market collapse in the fourth quarter Pork producers are still haunted by the collapse of the pig market at the end of 1998 At that time, numerous producers and small producers lost a lot because they could not find a way to process pigs Pork producers in the United States killed sows in the two quarter of the summer and sold sows, which made pig prices drop to $more than 10 and live at less than $20 per 100 pounds As of September, the number of breeding pigs was 2% lower than last year, and the number of pigs in summer 2002, including the commercial pigs listed in the first quarter of 2003, is also estimated to be less than the previous year The number of litter in autumn and winter shows that the supply of commercial pigs will decrease in the second and third quarters of 2003 It is exciting that beef and pork production will be reduced by 2% next year In 2002, beef production will be a record, but many analysts believe that beef has reached a low point and the contraction period has begun Domestic demand and exports are still high, and Canadian pork imports, which account for 6% of the current slaughter in the United States, may not grow so fast next year The negative factor is that the total output of pork in 2003 may reach a record again Food prices will be higher than in the past four to five years Although large producers are more able to adjust their production strategies to adapt to changes in input costs, they will face greater price pressure if grain production is cut next year Economists, on the other hand, note that pork prices are more flexible because producers strive to produce at 100% capacity There is a good balance between pig supply and processing capacity in the United States This means that if the supply of commodity pigs suddenly increases, the price may plummet Overall, U.S pork producers lost money this year From January to September this year, the average price of pigs is 33.7 US dollars per hundred pounds of live weight, while the cost price of producers' capital guarantee is 38 US dollars per hundred pounds of live weight However, economists note that the number of contracted pork sold at higher prices, or even close to the guaranteed price, is increasing For these producers, this year is a profit Another dangerous sign is that the price of pork futures will be strong next year This may allow marginal producers to stay in the industry in order to have better profits Because sow productivity is still increasing by 3% per year on average, producers should be careful not to expand the sow population The price in 2003 will be higher than this year, although it may be just a few dollars higher than the average price this year Although the preliminary forecast for 2004 is that the outlook will be better, for some producers, 2003 may still be a tough year.