Supply is set to remain strong Pork supply prospects appear increasingly to favour buyers, the latest evidence being livestock census results and output forecasts published in Washington on December 28. The US Agriculture Department’s figures are relevant to the British market because the huge American pig industry is now the world’s biggest exporter, its sales influencing stock volumes and prices within the EU.

At first sight the latest USDA report seemed to signal the international cyclical price upswing for which hard pressed UK and continental producers have been waiting since early 1999. American breeding stock numbers were 7% lower on December 1 than a year earlier, and producers indicated they had 5% fewer sows due to give birth in the coming March-May period than in the corresponding quarter of 1999.

With a shallow downtrend also evident in EU production, these figures would traditionally have been interpreted as meaning total world output and trade likely to contract and prices to harden nearly everywhere. However, the US statistics also confirm a dramatic restructuring well under way in the American industry. The 1998-99 market shakeout on both sides of the Atlantic forced small producers out of business in the US and EU, but the concentration of output in large enterprises determined to maintain production capacity is much more pronounced in the American pig sector.

Almost 40% of the 60 million head US herd is controlled by just 105 producers, and fewer than 500 control well over half total output. The key feature is the speed of the output switch into large units with much higher productivity than small operators. This means fewer sows will not necessarily mean lower pigmeat production, in turn suggesting sustained downward price pressure for structural reasons reminiscent of the poultry sector’s development.