If there were any surprises in the latest USDA Hogs and Pigs Report, Lee Schulz, professor of economics and Extension economist at Iowa State University, said it came in the market hogs and pigs by weight categories. The under-50-lb. and 50-to-119 lb. categories came in lower than analysts’ pre-report expectations, while the 120-to-179 lb. category came in 3.5% higher than last year and the 180 lb.-and-over inventory came in 4.8% higher than in 2023, which were much larger than pre-report expectations.
“Some reports are a little more exciting than others and this report wasn’t too exciting,” said Brett Stuart, president and co-founder of Global AgriTrends. “Farrowing intentions, whether or not they actually come to pass, suggest no real further liquidation as we look out through winter.”
A Look at the Numbers
Beyond the market hog inventories by weight group, the report numbers came in close to analysts’ expectations, Schulz said. The total inventory for all hogs and pigs on Sept. 1 was 76.5 million head. That’s up slightly from a year ago and up 2% from June 1.
The market hog inventory on Sept. 1 was 70.4 million, up 1% from 2023 and up 2% from the previous quarter. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 53% of the total U.S. hog inventory on Sept. 1, up 1% from 2023.
“In December 1996, this number was 21%, and it’s now at 53% -- the highest it’s been since data started being collected in 1996,” Schulz explained.
The breeding inventory came in at 6.04 million head, down 2% from a year ago, and up 1% from June 1. The June through August 2024 pig crop, at 35.0 million head, was down 1% from 2023. The number of sows that farrowed during this three-month period was down 2% from 2023 at 2.99 million head, which represents 50% of the breeding herd. The average pigs saved per litter was 11.72 for the June through August period, compared to 11.61 last year.
U.S. hog producers intend to farrow 2.96 million sows during the September through November 2024 quarter, down slightly from the actual sows farrowing during the same period in 2023, and down 4% from the same period in 2022. Intended sows farrowing for December 2024 through February 2025, at 2.93 million sows, are up slightly from the same period in 2023, and down 1% from the same period in 2022.
All inventory and pig crop estimates for September 2023 through June 2024 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data.
A revision of 1.0% was made to the June 2024 pig crop. A revision of 0.3% was made to the March 2024 through May 2024 pig crop. A net revision of 0.2% was made to the March 2024 all hogs and pigs inventory. The net revision made to the December 2023 through February 2024 pig crop was 1.8%.
Less Disease Pressure
“Productivity gains have been highlighted in the last several Quarterly Hogs and Pigs reports,” Schulz said. “We are at historically high productivity levels. If you look at pigs saved per litter levels, I would argue the industry is continuing on this new trajectory of larger year-over-year increases. This is after litter rate growth was relatively stagnate from 2020 through 2022.”
However, as you look at the year-over-year changes, it’s not that surprising we are starting to see a slowing rate of increase. . Remember, we are comparing to a high base period a year prior. This, however, does not mean litter rates will decrease. I anticipate continuing to see record pigs saved per litter for each respective quarter if we maintain similar conditions.”
One of those conditions is disease incidence. The latest data from the Dr. Bob Morrison’s Swine Health Monitoring Project shows porcine reproductive and respiratory syndrome (PRRS) and porcine epidemic diarrhea virus (PEDV) incidence levels have been lower than prior years. Schulz said this is one factor contributing to the higher productivity levels we continue to see in the U.S. pork industry.
Persisting Economic Conditions
U.S. hog cash receipts (quantity and price), published by USDA’s Economic Research Service, are currently some of the highest cash receipts the pork industry has seen, he noted.
“Now, when you adjust for inflation (real dollars), those dollars don’t go as far. We’ve seen periods where there have been higher cash receipts on that adjusted standpoint,” Schulz said. The current 2024 cash receipts forecast is $27.9 billion for the U.S. hog industry.
Currently, Schulz said some producers are seeing profitability. The Iowa State University model shows an average loss of $3.86 per head for farrow-to-finish production in 2024. In 2025, he projects very modest profits at $1.62 per head, realizing there is a lot of variability across producers.
“There is a lot of risk in today’s environment, but the market is offering some opportunity with profitable futures prices in the near-term as well as at times next year,” he said.
Can Exports Save Us?
Stuart said January through May production was up 0.6%, then June through August was up 3.8% as weights went up. Although he initially thought WASDE’s projected 2.7% pork production growth seemed ambitious, he believes it’s looking more possible.
“With all the production growth, can we export ourselves into a better spot?” Stuart asked.
He said they won’t save the U.S. in 2024. He explained that 6% export growth absorbs 1.5% production growth. That means about half of the U.S. production growth will be absorbed through exports, but the other half will not.
“The ‘normal’ risks to pork exports include disease, politics, interest groups and potential export restrictions. However, opportunities abound,” Stuart pointed out. “U.S. pork remains very competitive globally. European pork faces serious threats and will likely see production declines over the next decade. Mexico buys 10% of U.S. production.”
Why Mexico Matters So Much
As Stuart compares U.S. export markets, one market continues to stand out – Mexico.
“Growth to Mexico has been shocking. We’re approaching 2.7 billion pounds of pork going to Mexico,” he said. “If we look at export and export risk, we need exports to Mexico to work and continue.”
Hams have a major impact on the cutout. They are a key driver to the cutout. This ham business to Mexico is now 10% of the entire pork production in the U.S. This makes some people nervous, he said.
“You can make that debate either way. The amount of pork Mexico eats now is 51% imported,” he said. “What that shows us is Mexico is pretty dependent on the U.S., too. We have a healthy co-dependence on each other. The bottom line is we are pretty good at resolving issues with Mexico because we have this healthy co-dependence.”
What’s Going on in China?
China’s overall pork demand may be smaller in the future, Stuart said. He still expects key export items like ears, feet, neckbones, tails, etc., with limited use elsewhere will likely see continued demand by China. However, he notes import demand for whole muscle cuts are mostly on hold for now and that market may not return to historical demand levels.
“Imported beef demand remains decent even as their domestic beef prices have fallen,” he said. “The average imported beef price sis now above their domestic prices and U.S. beef prices reached new highs in July. South American beef quantities remain large in China due to heavy slaughter rates, but that is expected to moderate in 2025.”
China’s monthly meat and poultry imports have declined from the peaks of the African swine fever related pork shortages in 2020, but he notes they remain about $1.7 billion a month.
“China will remain the largest meat and poultry market on earth,” Stuart said. Although their hog cycle has likely turned, he said there is no real reason for optimism for now.
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