Hog prices are set to remain elevated, and retail pork values "unusually high", thanks to a slide-off in production at a time when demand is being stoked by China, whose own prices have hit record highs.
The US Department of Agriculture warned that expansion throughout the domestic livestock industry was "tenuous", with high grain prices to force a year-on-year drop in broiler production in the second half of 2011, while drought in the South prompts cattle farmers to slaughter cows they had earmarked for breeding from.
"The high rate of cow slaughter will likely limit calf crops for at least this year and next," USDA analyst Rachel Johnson said.
However, she highlighted in particular the squeeze facing the hog and pork markets as a fall-off in output expected to accelerate into a year-on-year decline in the October-to-December quarter, thanks to lighter animals.
'Important outlet'
"While the spring pig crop points to slightly higher fourth-quarter slaughter, dressed weights will likely average below 2010 levels, which were achieved when a combination of corn quality and optimal feeding weather boosted weight gains," Ms Johnson said.
Meanwhile, demand will boosted by exports expected to rise by 12% in the second half of 2011, fuelled by demand from China, the biggest pork consumer.
Since the lifting last year of trade restrictions on US pork, imposed following the swine flu, or H1N1, scare, "China has developed a pattern of consistent purchases of important quantities of US pork products", often ranking in weekly export data in the top five destinations for shipments.
China, already "becoming an important outlet for US pork products", was likely to see its "evolution as an export destination for US pork products… continue to evolve".
The impact in the US meant that "continued year-over-year higher hog prices and unusually high retail pork prices are the most likely outcome for second-half 2011", Ms Johnson said.
'Extreme heat'
The comments come a week after Chinese inflation data showed pork prices soaring 57% year on year, as demand for the meat in a country responsible for half world consumption far outstripped domestic supplies.
The US Meat Export Federation, an industry group, said that US pork exports to China so far this year were, at 99,400 tonnes, "comparable in volume to the record pace of 2008", besides being worth more than $150m.
Meanwhile, US Commodities also highlighted the prospect of a fall-off in hog weights, noting that they had been behind year-ago levels for seven successive weeks.
"The extreme heat in the US will help keep weights below 2010. This will offset the larger slaughter [numbers]," the Iowa-based broker said.
However, lean hogs for August delivery fell 1.5% to 97.45 cents a pound on Monday, a weak day for many commodities and other assets deemed riskier investments.
Belly flops
*Monday also brought the delisting of pork belly futures, made famous by the film Trading Places, which the CME Group scrapped following a drop in investor interest.
Trading volumes in Chicago's near-term contract had totalled two lots, both on January 25, so far this year.
"The frozen pork belly contract was no longer seen by end users as an effective hedging instrument, particularly given the shift towards using more frozen bacon," a report from Steve Meyer and Len Steiner, for the CME Group, said.
"Also, the seasonality of pork belly prices no longer is what it used to be, with bacon becoming a staple of foodservice menus year round."
This meant a gap in contracts between August and February was "insufficient to meet the industry's hedging needs".
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