Domestic Pork Demand at a Breaking Point?
By Marlys Miller
| Thursday, December 29, 2005
During the last two years, Pork demand has been riding a wave, but the tide is changing.
While it's no longer news that pork benefited from consumers' high-protein diet phase, and beef's BSE episode, it is worth repeating.
"Both the beef and pork sectors are going to have to wake up to lower domestic demand trends," notes James Minert, Extension economist at Kansas State University. He points to third-quarter 2005 domestic pork demand, showing a 8 percent to 9 percent drop from 2004 levels. "I think we'll see the fourth-quarter demand numbers reflect that too."
He suggests the pork industry take notice. During the past couple of years with meat demand's breakneck pace, it's been hard to convince producers that they have to worry about long-term demand. "It's a long-term issue," says Minert. "Both beef and pork should increase efforts and checkoff spending for product research and development."
It won't help for 2006, or maybe even 2007, but even with the modest production growth revealed in USDA's December Hogs and Pigs Report, there's more downside potential in hog prices ahead. (See "Modest Production Growth, but Prices will Slip Lower" for details.)
In contrast, U.S. pork export sales have been the hot ticket for several years. For example, exports through October 2005 have been running 24 percent ahead of 2004's record pace. Certainly the weaker U.S. dollar is helping U.S. export sales, as pork has gained market share in countries, including Japan. Also, there may have been a global shift toward pork in beef's absence that could be maintained. Russia, South Korea and China have been big U.S. pork buyers in recent months.
There is some concern for 2006's prospects. "Pork has benefited greatly from reduced U.S. beef exports," says Minert, "but it is only part of the equation. I don't think pork exports will plummet due to eventual increases in beef sales. I am relatively optimistic that pork exports will grow, but not at the same pace."
