VOL. 18, NO. 4 / FALL 2023 / URNER BARRY'S REPORTER • 29
July 1
Any whole meat
pork being sold in
California must
be "prop-12
compliant".
June 1 - July 7
Cutouts skyrocket to
$110.8/cwt. In addition
there is a $144.70/cwt
rise in
13/17 bellies.
Mid-to-late June
The interpretation of the law changes
and any pork in the U.S. from a
hog slaughtered prior
to July 1, with proper
paperwork and regardless
of location, can be sold in
California throughout the
end of the year.
June 16
A flurry of inaccurate news
headlines leading with
"Prop-12 has been postponed"
hits newswires across the
country. Urner Barry notifies
the industry that the law was not postponed, but
that the stipulation on the location of the pork to
be sold in California post July 1 has been nullified.
from anyone who could get product into California, which was
a welcomed sight for many market participants. Through the
first half of 2023 pork demand was dismal to put it nicely. Items
such as skinless pork bellies trended at nearly all-time lows in
addition to product at a 52-week high in the freezer. This gave
participants an obvious out of that situation, hence the $144.70/cwt
rise in 13/17 bellies over the five weeks succeeding June 1. After
not breaking $85/cwt for the first five months of the year, the UB
pork cutout skyrocketed to $110.8/cwt from June 1 through July 7.
Participants freely mentioned that it seemed if there was a truck
available in the U.S., it was going to California with pork!
This was all true, until California announced in mid-to-late June
that the interpretation of the law has changed and that now
any pork in the U.S. from a hog slaughtered prior to July 1, with
proper paperwork and regardless of location, could be sold in
California throughout the end of the year. On June 16 a flurry of
news headlines leading with "Prop-12 has been postponed" hit
newswires across the country. This of course was inaccurate, and
anyone that read the legal briefing would have known otherwise.
At Urner Barry we made it a point to notify the industry over the
following few days that the law was not postponed, but that the
stipulation on the location of the pork to be sold in California post
July 1 had been nullified.
It is important to note that at this point in late June many
participants in California were committing to working solely with
prop-12 compliant pork, regardless of pricing, right from July 1.
The operations that have done this have felt the squeeze in terms
of margins. Features from retailers in California have been down
significantly for pork items versus what we have seen in recent
years during the summer. As of the writing of this article, there are
shelves stocked with bacon at $13.99/lb. in California. The question
that begs to be answered is, can consumers really afford that in
this current economic climate? For reference, the weekly average
bacon price in mid-August around the U.S. for non-discounted
product is $6.05/lb., according to data from Circana.
As we rolled into July 1, the purchasing of commodity pork from
California slowed but the typical uptick in seasonal demand
throughout the rest of the U.S. showed itself. In addition to this, the
cyclical tightening of production occurred as well, giving the entire
pork market a healthy layer of support. At this point it became
clear that the pork market as a whole was firm, and that from a
data perspective classifying prop-12 specific sales was easier
said than done. The USDA LM_PK650 Specialty Pork Report is
the report that will have all prop-12 compliant pork trade that is
labeled mandatory reporting. However, since July 1, we have only
seen a slight uptick in overall volume on the weekly report and
considering that it also includes cuts that are from antibiotic free,
no antibiotic ever, pre-priced and labeled, color graded, breed
specific, quality graded, and organic we can not say for certain
what has been mandatory reported for prop-12 specific pork.
As we currently sit in mid-August, participants are reporting varying
opinions on the new law. Some are saying that they are complying
fully and that the prices are what people expected; expensive.
Some are in the opposite camp and still working through product
that was grandfathered in. It is still very early on in the process,
we are one and a half months into the implementation of prop12, so this article will have an update around this time next
year
to see what worked, what didn't, and how other states such as
Massachusetts compare and contrast.
Article contributed by Ryan Hojnowski
rhojnowski@urnerbarry.com
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June 6
Any pork
brought into
California
prior to
July 1,
compliant or
not, can be sold until 2024.
BREAKING!
$0.90
$1.10
$1.30
$1.50
$1.70
$1.90
$2.10
$2.30
$2.50
$2.70
Jan Feb Mar Apr May Jun Jul
Price Per Pound
13/15 Derind Pork Bellies in 2023
Source: UB
$0.75
$0.80
$0.85
$0.90
$0.95
$1.00
$1.05
$1.10Jan Feb Mar Apr May Jun Jul
Price per pound
Urner Barry Pork Cutout in 2023