News Pigs & Pork
Export offsets low demand for pork in the US
The American pork market is slowly getting out of the slump, although not due to domestic demand. The price of pork in the state has increased significantly due to the notorious Californian animal welfare law Prop 12. However, this is accompanied by a very significant drop in demand, which the US is able to compensate for with strong exports.
American pork prices have increased significantly since the beginning of 2024. In January, pork prices were at a minimum of around $45 per center weight (CWT). By May, the price was roughly twice as high, with prices around $90.
The Californian animal welfare legislation Prop 12 continues to dominate the American pork market. The law mandates a minimum area of 2.2 square meters for farrowing crates. All pork sold in the state must meet this standard, including pork produced in other states. Data from American agricultural research firm Global AgriTrends shows that pork prices in the state have increased by an average of 20%. The US Department of Agriculture (USDA) has calculated that the increase can reach up to 41%.
Although this pushes pork prices up, the drop in demand is significant. According to Global AgriTrends, demand in California has decreased by roughly 25%. Since the state consumes approximately 13% of all American pork, overall demand in the United States decreases by about 3%.
Strong exports offset demand decline
So far, the United States has been able to successfully market the excess conventional pork that California no longer accepts on the world market. American pork exports remain very strong. In total, the United States exported a whopping 277,910 tons of pork, as data from the US Meat Export Federation (USMEF) shows. This is a 14% increase compared to April 2023. The value of exports rose to $900 million. Market expectations are that exports will remain strong. Global Agri-Trends expects exports to increase by as much as 9% in 2024 compared to 2023.
A significant increase in Mexican exports contributed to the strong results. In total, the United States exported a record volume of 107,594 tons of pork to its southern neighbor, a 34% increase compared to the same month in 2023. The value of exports increased by 61% to $240.5 million. Additionally, exports to countries such as South Korea (+23%) and Japan (+3%) are also on the rise. The value of exports to both countries is increasing as well. The value of exports to South Korea increased by 33% and the value of exports to Japan increased by 5%.
Low Chinese demand persists
One factor that continues to somewhat limit Americans is the lower Chinese demand. Export volumes decreased from 46,662 to 40,648 tons. The value of exports to the Asian country decreased by a significant 24% to $94.96 million due to lower Chinese pork prices. With substantial domestic production, demand in China remains weak, causing the country to overlook expensive Western markets. Global Agri-Trends expects that despite the significant increase, the Chinese market will not be a major factor for the time being. To make imports from Western countries profitable, the price would need to increase by 18 to 26 yuan. At current exchange rates, this translates to a price in euros from €2.30 to €3.34.
