U.S. Pork Supply Surges as Feed Costs Spur Production Increase

Pork inventories in the U.S. rose 31 percent to a record at the end of August from a year earlier, the government said, as farmers culled herds because of high feed costs, pushing meat production to a record.

Warehouses held 580.8 million pounds of pork, up from 442.9 million on Aug. 31, 2011, the U.S. Department of Agriculture said today in a report. The figure was the highest ever for the date, the USDA said. Inventories rose 5.7 percent from the end of July.

U.S. commercial pork output in the first eight months of 2012 totaled 15.1 billion pounds (6.85 million metric tons), up 3.3 percent from the same period a year earlier, government data show. Pork production last month rose to a record 2 billion pounds, up 16 percent from July and 5.6 percent higher than August 2011, USDA data show. The price of corn, the main ingredient in livestock feed, is up 48 percent since June 15 as the worst U.S. drought since 1956 erodes yields.

“There’s no doubt the high grain did cause higher liquidation,” Don Roose, the president of U.S. Commodities Inc., said in a telephone interview from West Des Moines, Iowa. “We’ve had bigger supplies, and consumption in general was down a little bit.”

Hog futures for December settlement rose 0.7 percent to 74.7 cents a pound at 10:40 a.m. on the Chicago Mercantile Exchange. Prices were down 12 percent this year through yesterday.

Wholesale pork prices slumped 11 percent in August, the biggest monthly slide since October 2010.

As of Aug. 31, stockpiles of pork bellies, which are cured and sliced to make bacon, fell 9.2 percent from a year earlier to 13.8 million pounds, according to today’s report. Warehouse supplies of ham climbed 30 percent to 195 million pounds.

Chicken-meat inventories at the end of August were 5.6 percent smaller than a year earlier at 655.3 million pounds, the USDA said. Beef supplies rose 0.3 percent to 429.8 million pounds.

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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