US pig price rises rapidly

The American pig market is rapidly recovering from a deep price trough. The Iowa/Minnesota quote has already risen nearly 40 cents since the end of April, approaching levels where pig farmers can write excellent returns.

The reason for the price increase has to do with the pig supply in the United States. Traditionally, the number of slaughters decreases as spring arrives. That is the case again this year. In addition, the domestic meat market decreases in volume when temperatures rise.  

Listing surprised
At the end of April, the American pig price was still USD 1,18 per kilo. However, that quotation closed considerably higher on Friday 12 May, namely at $1,55 per kilo. The American pig price is a daily price. This means that the market can fluctuate considerably in a relatively short period of time. The American market is therefore a lot more speculative than the market here in Europe.

Meat market offers space
Based on the carcass price, which is around USD 83 in mid-May, slaughterhouses achieve a gross margin of USD 15 per pig. Therefore, analysts expect the pig price to have the potential to rise further. During the summer months, a pig price around $1,80 per kilo is achievable. This is a desirable development for the European pig sector, as both superpowers compete in the global market. Especially in Asia.

The first factories of the planned expansion, of additional slaughter capacity, are currently becoming operational. Meat processor Prime Pork has started slaughtering an additional 6.000 pigs per day in Windom, Minnesota. In total is the slaughter capacity expanded by approximately 7,1 million pig places this year.

World market more important
Compared to a record high pig herd, there is therefore extra slaughter capacity. This does mean that America will have an even more prominent presence in the global market. In the first 19 weeks of this year, a total of 43,7 million pigs were slaughtered. That is a plus of 2,5 percent compared to last year. Meat production increased by 2,2 percent to more than 4.2 million tons. In March, the US exported a total of 227.000 tons, an increase of 16 percent compared to last year.

Now that the American pig price is picking up, European pork exporters are logically less affected by price pressure. More fighting is needed for the placement space, given the rising export figures of pork in the United States. 

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Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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