Pork Producer Optimism Dampened by Triple Threats

• Across the board in animal protein, producers have been dealing with input inflation. Pork producers in particular have been struggling, as hog values languished through mid-year and have not kept pace with costs.
• In what is expected to be a short-term boost to pork values and hog prices, buyers scrambled to gain pork inventory ahead of new mandates from California Proposition 12. The U.S. Supreme Court ruled on May 11 to uphold Prop 12, which bans the sale of pork in California from farms using gestation crates.
• Although hog prices were under severe pressure to start 2023, retail price points have been slow to respond, limiting consumption growth.
• One-quarter of U.S. pork is exported. China’s sharp drop in import demand has unsettled the U.S. industry but a bright spot is Mexico, which is boosting imports to keep up with growing per-capita consumption.
• In the long run, low hog values, high costs, and tepid demand have dissuaded producer expansion, which is stunting U.S. pork production.

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