USDA outlook for US pork production and exports

Thursday, 29 October 2020

For most of 2020, the US pig industry has been facing a very challenging period, characterised by low prices and difficulties with slaughter capacity. Understandably, there are indications that the industry is cautious about the near future; the breeding pig population decreased in the latest USDA inventory on 1 September. Despite this, the outlook is still for increased production in 2021.

The inventory indicated that about 3.2 million sows farrowed during the June-August quarter, 2.9% fewer than the same quarter in 2019. These animals would have been impregnated at a time when the uncertainty surrounding the pandemic was spreading. Farrowing intentions for autumn and winter are also down on the year. If this is realised, according to the USDA, this would be the first period of three consecutive year-on-year declines since December 2013.

Processors’ efforts to manage continued virus-related staff shortages and restrictions to inhibit further infections are likely to raise costs, limiting capacity utilisation into 2021. Pork production in the fourth quarter this year is expected to be about 2% below the same quarter in 2019, largely due to continuing constrained processing capacity. However, pork production in 2020 in total is expected to total 12.8 million tonnes, almost 2% more than production in 2019, despite all of the difficulties faced during the year.

In the first quarter of 2021, pork production is expected to be about 3.3 million tonnes, 2% lower than a year earlier. This is because of a smaller summer pig crop and unusually high slaughter in the first quarter of 2020; towards the end of that quarter, producers brought pigs forwards expecting COVID-19-related difficulties. In the longer term, growth is expected to return. The USDA is forecasting pork production to be 12.93 million tonnes in 2021, about 1% greater than production in 2020.

Export forecasts for the fourth quarter of 2020 and early 2021 have been reduced as well. This reflects expectations of continued weaker demand from China and poorer economic conditions in other major importing countries. But even so, exports in the fourth quarter of 2020 are expected to total 860,000 tonnes, still more than 4% above a year earlier. This would bring the year’s total to approximately 3.36 million tonnes, more than 16% higher than 2019. Growth this year has overwhelmingly been driven by China. Excluding offal, volumes exported by the US to China have more than tripled in the first eight months of 2020, to 537,000 tonnes. How long this can last is uncertain. The USDA’s forecasts point to total export volumes in 2021 being roughly equal to those in 2020.

Duncan Wyatt

Lead Analyst - Red Meat

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