Softer pork export outlook poses questions for long-term producer profitability. PLUS a Cargill Pig Flash market outlook
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Pork exports are projected to soften by about 2% in 2023, even as 2022 shipments trailed 2020 and 2021, posing some thorny questions for the industry on the cusp of the new year. With the U.S. Department of agriculture forecasting 6.4 billion lb. and about 6.3 billion lb., respectively, for 2022 and 2023 exports, it seems that global inflation is leading buyers toward chicken at the expense of other center-plate proteins.
Indeed, USDA sees turkey and poultry exports growing at 1.8% and 2.2% next year, while pork and beef sales fall – beef tailing off by more than 13% by volume. This demand-side pressure, along with feed cost projections remaining flat to slightly lower through Q1 of 2024, suggests the opportunity for producers to bank some profits becomes much smaller late next year. Cargill’s commercial pork team, in its latest calculations using the Cargill Nutrition Cloud, sees profits ranging from 30 cents to $41.28 per head from next spring through September, with seasonal pressure pushing the forward profit curve firmly back into the red by mid-October.
Feed costs remain a key concern, with corn and DDGS remaining stable to slightly weaker, and soybean meal prices firmer. Vitamin and mineral prices are mostly stable to lower with weakening demand and more favorable supplies, but total feed costs per head are only projected to drop 5% between now and March 2024. With these implications to the crush, vigilance to monitor diet strategy and optimum weight adjustments are vital to profitability. Which takes us right back to the revenue side of the equation. Current lean hog futures prices suggest hog prices will be slightly weaker this time next year, so while the cost structure of the business might be marginally more favorable, those gains will largely be offset by softer top-line revenue.USDA will publish its quarterly Hogs & Pigs Report Dec. 23, and that report should underscore the inventory situation we discussed in this column in the October issue of Feedstuffs. Join Feedstuffs and Cargill for a discussion of the report and the outlook for 2023 in a special webinar in January; stay tuned to the Feedstuffs Daily and via social media for the date and time for this upcoming webinar event featuring expert analysis and commentary from Cargill’s commercial pork team about the updated inventory situation and what it means for the markets moving forward.
