PORK REBOUNDS

Beef headed to 22-year low as it falls to third in the U.S.

Production of pigs passes beef in the U.S. after a swine disease outbreak last year,

CHICAGO— In the U.S., the country that made the hamburger a global icon of American fast-food cuisine, beef is about to fall another spot on the meat scale.

For the past two decades, chicken has outranked beef as the most produced meat, and now pork is about to surpass it as well. Hog herds have rebounded from a deadly virus last year, while record-high meat prices and cheaper feed led to breeding of more sows and bigger pigs. As pork output in 2015 jumps 4.6 per cent to a record, cattle ranchers have yet to recover from a 2012 drought, and beef production is headed for a 22year low, the U.S. Department of Agriculture estimates.

When porcine epidemic diarrhea virus killed millions of piglets across the country in 2014, prices for bacon and pork chops surged to all-time highs as supplies tightened.

With more hogs arriving in recent months and demand increasing, costs are dropping for buyers including Domino’s Pizza and Hormel Foods.

“A year ago, it looked like the sky was going to fall,” said Ed Juhl, a farmer in Hudson, Iowa, who lost about 2,400 pigs to the virus in June. His herd is now healthy, and he expects output by June will be back to its annual sales pace of 36,000 animals. With each passing week, the industry’s “confidence that we’re going to increase pork supply is rapidly going up.”

That’s because the breeding-sow herd, during the three months ended Dec. 1, posted the biggest increase since 1998 and reached the largest in five years, the government reported Dec. 23. The total hog population jumped 2 per cent from a year earlier to 66.05 million, the most in five quarters.

After two years of bumper corn and soybean crops, feed is cheap and that means hogs are getting bigger. On average, pigs for slaughter weighed 98 kilograms last year, touching a record 100.7 kg in May, compared with 94.3 kg in 2013.

Pork production will climb this year to a record 10.844 billion kilograms, as per-capita consumption reaches the highest in five years, the USDA said Jan. 12.

Beef output will drop 1.7 per cent to 10.841 billion kilograms while chicken jumps to an all-time high of 17.784 billion kilograms, government data show.

For now, hog producers still have an incentive to expand. Juhl, the Iowa farmer, said he has remained profitable even after the plunge in cash prices. He sold hogs in late January at around half the price compared with last year’s peak of $103, he said.

The pork surplus isn’t getting any help from the strong dollar, which is slowing U.S. exports.

Shipments fell from a year earlier in each of the five months through November, the most recent government data show.

“We have to try to absorb that pork in the domestic market,” U.S. Commodities’ Roose said.

“We already have a surplus coming at us.”