US pork prices expected to rise this summer
Food inflation is expected in the US as prices for chicken and pork will
go up over the next couple of months, Associated Press
Overall food inflation could double this year, initially
lifted by the rising costs of fuel, corn and soybeans, some analysts
Food inflation hit 4% last year, up from 2.4% in 2006. While
beef prices were already high, chicken and pork prices didn't reflect record
costs for feed and fuel. That is about to change as chicken and pig producers
who have been losing money slaughter more animals to decrease the supply and
raise the prices they can charge.
Tyson Foods, the world's biggest meat producer,
forecasts that its expenses will rise $1 billion this year, including $600
million for corn and soybean meal and $100 million on grain. The balance will
come from higher prices for cooking oil, breading and fuel costs, the company
said. Last week Tyson reported a $5 million second-quarter loss and withdrew its
earnings outlook, saying feed prices were too volatile.
"I think food inflation has got to go up," said
C. Larry Pope, president and chief executive of Smithfield Foods, the world's
largest pork producer, in a recent speech. "Everything that uses wheat,
everything that uses corn, everything that uses corn syrup has got to go up."
Pork farm losses
Pork farm losses may total $3.8 billion for 2008, one-quarter of total
production, said Chris Hurt, an agricultural economist at Purdue University. He
calls the industry 'a financial disaster in progress'.
driver to prices is grain costs, which have been affected by the rise in ethanol
production and strong export demand due to the weak dollar. Corn costs have more
than doubled over the last two years from $2.50 a bushel to $6.
result, companies are slaughtering animals to tighten supply. The move will
temporarily increase supply, lowering prices, but as farms herds and flocks get
smaller, it will raise prices. Smithfield said in February that it would
slaughter 4% to 5% of its breeding sows.
Smaller hog breeding
A smaller breeding population and a wave of expected hog farm
failures will boost pork prices by 2009, Hurt predicted. He estimates 6% to 8%
of breeding sows will need to be slaughtered to support prices.
The government is
giving pork producers a hand by taking some pork off the market. Agriculture
last week announced a government plan to buy up to $50 million of pork for child
nutrition and domestic food assistance programmes - at the urging of the
National Pork Producers Council (NPPC).
â€¢ Smithfield Foods
â€¢ Tyson Foods
â€¢ Pilgrim's Pride
â€¢ National Pork Producers Council (NPPC)
here to receive the latest Pig Progress free newsletter
To comment, login here
Or register to be able to comment.