Too much pork, tariffs mean too few buyers

The pork industry appears to be headed for a period of large losses in which excess pork supplies force prices below costs of production, according to Purdue University agricultural economist Chris Hurt.“Demand will likely be weakened by reduced exports with tariffs in place on U.S. pork exports to China and Mexico. On a positive note, Chinese tariffs on U.S. grains and soybeans are helping to erode feed prices along with favorable growing season weather,” Hurt says.The industry has expanded the breeding herd by 3 percent according to a recent USDA producer survey. This is the highest rate of breeding herd expansion since this expansion phase began in 2015. Hurt explains that a breeding herd of this magnitude is likely to be a primary contributor to excess supplies in 2018 and 2019.The market herd was up 3 percent and farrowing intentions for this summer and fall were up 2 percent. With the breeding herd up 3 percent, Hurt says there is concern that actual farrowings this summer and fall could be higher than the 2 percent increase recorded by survey respondents.According to Hurt, pork supplies will also be large.