The USDA Quarterly Hogs and Pigs Report shows productivity continues to run ahead of sow liquidation in the U.S. herd.
Inventory of all hogs and pigs on June 1, 2024, was 74.5 million head. This was up 1% from June 1, 2023, and up slightly from March 1, 2024.
Breeding inventory, at 6.01 million head, was down 3% from last year, and down slightly from the previous quarter.
Market hog inventory, at 68.5 million head, was up 2% from last year, and up slightly from last quarter.
The March-May 2024 pig crop, at 34.0 million head, was up 2% from 2023. Sows farrowing during this period totaled 2.94 million head, up slightly from 2023.
The sows farrowed during this quarter represented 49% of the breeding herd.
The average pigs saved per litter was 11.56 for the March-May period, compared to 11.36 last year.
Dr. Steve Meyer, Senior Economist with Ever.Ag, says the numbers came in very close to pre-report estimates.
“The one exception is the breeding herd was down 1% more than what analysts expected and a little more than what I thought, and June-August farrowing intensions were down 1.1% whereas March-May intensions were up 1%,” he added.
Meyer says the pigs per liter actually came in 1.7 % higher than a year ago but was slightly lower than expectations showing productivity is slowly easing. “It’s been up 3% to 4% over the last year or so,” he says.
The report also showed a slightly larger inventory than a year ago and until that changes the market will continue to see price pressure.
“To turn the market and profitability around we need better pork demand, lower costs and fewer pigs. So far, we haven’t done much on supplies and that’s really what this Hogs and Pigs Report tells us,” he says.
There may be some hope down the road as the breeding inventory number was down 3%.
Meyer says it’s tied to liquidation of the sow herd, which has shown up in higher weekly slaughter in 2024. That should translate into a smaller breeding herd down the line. “The question is whether or not the increase in January and February was due to depopulation-repopulation and we think it was,” he adds.
Brett Stuart, President and Co-Founder of Global AgriTrends, agrees inventory is still at 101% because of the productivity of the herd.
“I keep waiting to see when liquidation of the herd will actually outpace productivity and so far, that hasn’t happened,” he says.
Meyer and Stuart were part of a webinar hosted by the National Pork Board and the Pork Checkoff to discuss the latest report and take a look at domestic and global pork industry trends and demand.
Meyer is projecting hog prices for the year will average $85 to $88 per hundred weight. However, that may be at or below the cost of production.
According to Iowa State University data, pork production costs are currently running over $86 per pig, which is down 11% from 2023 but up 36% verses 2020.
That is based on an average corn price of $4.51 per bushel and soybean meal at $360 per short ton.
While feed costs are part of the inflated costs, Meyer says even with $4 corn and $300 per ton soybean meal the costs only come down to around $80 per head, which is still high.
“Iowa State University has put non-feed costs or fixed costs at $18 per head over the last two years and I don’t think those are going away. So, we’re going to have some high costs to deal with for some time,” he adds.
On March 1, Meyer says producers could lock in a $5 per head profit, but with the recent selloff in lean hog futures that has dropped substantially and last week was projected at a $9 per head loss.
That is setting up 2024 to be the third year in a row of negative profit margins.
Meyer says domestic consumer demand has not been as good as 2021 and 2022 which has been a drag on prices. “We’re kind of back in that pre-2021 level. I can’t say that demand is bad, it’s just not as good as we had been accustomed to for a couple years,” he says. Some of that may be tied to inflation.
Stuart says it may also be linked to the effects of Proposition 12 in California, which has lowered consumer buying in a state that accounted for 13% of U.S. pork consumption.
However, U.S. pork exports have taken up much of that slack. So far in 2024 he says the U.S. has exported 7.4 billion pounds, which is up 9%. Mexico is the leading customer for U.S. pork buying mostly fresh hams and they have continued to enjoy a currency advantage with a fairly strong peso.
Stuart is optimistic about exports moving forward as the EU has seen a 2 million metric ton drop in production in the last two years and that could provide opportunities for the U.S. in global markets.
China’s hog herd has also been shrinking with their pork producers under water the last three years. Stuart says they have seen a 28% increase in live hog prices in China since May 1 but prices are still at a level that it isn’t translating into sales for the U.S.
