Pork Market Watch: ASF, Prop 12, and Forecasts

Pork markets are subject to additional uncertainty this year due to the resurgence of African Swine Fever and the presumed implementation of Prop 12 mandates in California. We are currently forecasting total annual
production to be close to flat and 5-8% inflation in the pork cutout, with significant variance by primal and by quarter (shown below). We are basing current forecasts off of the assumptions of global exports similar to a year ago, with reduced exports to China mostly offset by growth in other markets, and potential for a complete offset if Mexico demand remains strong. The forecasts also assume either a January 1, 2022 implementation date of Prop 12 or a potential delay smoothing out, but not eliminating, market interruptions and we view Prop 12 as more disruptive to 2022 pork markets.

Download the 2021 Pork Commodity Report

Key Points

1. ASF appears to be returning at an accelerated rate in China and limiting the magnitude of the recovery in China’s pork industry.ASF appears to be returning at an accelerated rate in China and limiting the magnitude of the recovery in China’s pork industry.

2. Our work suggests much less than half of the US pork industry has started to shift its production practices to be in compliance with CA Prop 12 mandates.

3. We are forecasting 6-8% pork price inflation in 2021 and see significant inflation in belly and ham primals, but deflation in the loin primal.

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