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Reports earlier this week hand-wrung that a wholesale price surge for pork would have a dramatic impact on the holiday table. Although there have been no reported cases of African swine fever virus on American soil, some industry experts said boosts in international demand for American pork would winnow stockpiles and prompt high prices.
Reserves are in good shape: U.S. pork production is on a record pace for 2019. The Livestock Marketing Information Center, which provides economic analysis of the livestock industry, forecasts 2019 pork production at 27.6 billion pounds, up 4.7 percent over 2018.
“If demand surges at the holidays, we have additional capacity to increase production,” says Sarah Little, vice president of communications for the North American Meat Institute, a trade organization representing producers.
Wholesale ham has nearly doubled in price this year to 91.53 cents per pound, according to expert Steve Meyer, an economist with Kerns and Associates and consulting economist for the National Pork Producers Council. But there’s no reason for consumers to panic.
“Prices don’t rise across the board all at the same time,” Meyer said in a phone interview. “Wholesale increases are too late to impact the holidays.”
That bit of optimism aside, he says next year we are looking at higher prices for all proteins, mainly driven by the widespread death of pigs in China as well as Vietnam, the world’s sixth-largest pork producer, and the Philippines, the eighth-largest and the country where the virus most recently appeared.
“Exports are trying to fill this big hole for protein, but they can’t fill the amount of pigs China has lost,” Meyer said.
China recently lifted long-standing restrictions on the import of U.S. poultry meat, but additional tariffs on U.S. pork that took the total duty from 12 percent to 72 percent remain. Meyer says China has been buying as much pork as it can from the European Union, Brazil and Canada, which exports about 70 percent of its pork.
Don Close, senior animal protein analyst at Rabo AgriFinance, says Thanksgiving hams have been in the system for months, but the Christmas/New Year’s period could see some modest additional price increase.
“The risk of any real price volatility is very remote,” he says, but next year could be a wild ride. He says the pork shortage in China will be filled in by a range of other animal proteins, and thus could mean high prices elsewhere. “In the 45 years I’ve been in the business, I haven’t seen anything as interesting and dynamic as this.”
He says the quantity of beef going to China from Brazil, Australia and New Zealand to offset the pork shortage has the power to add a little wobble to the system.
“It’s not by itself necessarily a significant quantity of product, but pretty soon it starts to add up,” Close said.
While American beef production may remain unchanged in 2020, Close notes that poultry broiler production is projected to go up 2.5 percent and pork 4 percent, largely in anticipation of sales to China.
He says other protein segments, specifically bacon and ground beef, could come under price pressure because of global events. If the United States is selling half carcasses to China, the bellies that make bacon will be lost to the American market. And ground beef, he predicts, will shoot up in price because New Zealand has cut shipments to the United States by a third to sell more to China, a trend that will likely increase next year.
“And Australian production is estimated to be down 15 percent because of drought,” Close says.
Meyer says consumers shouldn’t worry overmuch about ham prices for the holidays. Pork prices tend to go down in the fall because sows tend to have larger litters in cooler weather, so there are more pigs reaching market weight in the fall (there’s a 10-month lag between breeding and slaughter). And, he says, if consumers are flexible, there may be sweet spots in the pork market.
“Loins stay in the U.S.; we don’t have an export market for it,” he says. “If there’s an albatross, it’s loins. Pork loins and pork chops are a great buy in the grocery store every day.”
Pork chops, it’s true, go great with cranberry sauce.