Ethanol Drives up Production Costs
Per capita consumption of pork worldwide peaked in 2010 at 33.48 lb. per person, according to a Daily Livestock Report issued today by Steve Meyer and Len Steiner. It fell to 32.8 lb. in 2011 and is projected by USDA’s Foreign Agricultural Service to dip to 32.94 lb. per person this year.
September 26, 2012
Per capita consumption of pork worldwide peaked in 2010 at 33.48 lb. per person, according to a Daily Livestock Report issued today by Steve Meyer and Len Steiner. It fell to 32.8 lb. in 2011 and is projected by USDA’s Foreign Agricultural Service to dip to 32.94 lb. per person this year.
Similarly, U.S. per capita pork consumption/availability is already sharply lower than just a few years ago. The most recent high was 51.9 lb. in 2003. That figure is forecast to be 46.0 lb. this year and 44.6 lb. next year, declines of 10% and 12%, respectively, from the level of just five years ago, report Meyer and Steiner.
This is an expected reaction to higher costs. The average cost of producing hogs in Iowa farrow-to-finish operations from 1999-2006 was $52.76/cwt. of carcass weight pork. Last year that figure was $86.70/cwt. carcass weight. Based on Tuesday’s futures prices, that figure will be $90.16/cwt. carcass this year. Those same futures prices imply that breakeven costs will be $95.96/cwt. next year.
“While this year’s drought has certainly pushed costs higher, it is not the reason for the vast majority of the cost increase. That reason would be the emergence and rapid growth of corn-based ethanol in the mid-2000s. This major new user of corn grew at a rate that could not be matched by corn production growth, thus driving corn prices higher,” they said.
As a result, there will be less pork available, and prices will be higher for consumers – without a doubt.
Read more about the DLR by visiting www.dailylivestockreport.com.
You May Also Like