Although there were no earth-shattering surprises in the Dec. 1 USDA Hogs and Pigs Report, economist Lee Schulz says there are several important takeaways for pork producers as the year comes to a close.
“I think it shows relative restraint,” says Schulz, chief economist at Ever.Ag. “We’re not seeing any indication of expansion as you look at where the breeding herd is at, where sow farrowing numbers are at and where farrowing intentions are at.”
A big takeaway from this report is the continuation of productivity increases, he pointed out during a webinar hosted by the National Pork Board.
“As you think about the breeding herd, you could argue we have one of the youngest and most productive sow herds we’ve ever had,” Schulz says. “I think that is certainly contributing to large litter rates year over year.”
Of course there are still a lot of challenges out there, he adds, from disease pressure to labor availability. Still, the industry is seeing overall large productivity numbers compared to prior year levels.
“Productivity increases show the efficiency of the pork industry. We see roughly the same number of sows farrowed as a year ago, but the pig crop is up 2% because of larger litter rates,” Schulz says.
A Look at the Numbers
For the most part, the report numbers came in close to analysts’ expectations. The total inventory for all hogs and pigs on Dec. 1 was 75.8 million head, up 1% from a year ago, but down slightly from Sept. 1.
The market hog inventory on Dec. 1 was 69.8 million, up 1% from 2023 but down slightly 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 50% of the total U.S. hog inventory on Dec. 1, down 1% from 2023.
The breeding inventory came in at 6 million head, up slightly from a year ago, but down 1% from Sept. 1. The September through November 2024 pig crop, at 35.2 million head, was up 2% from 2023. The number of sows that farrowed during this three-month period was down slightly from 2023 at 2.96 million head, which represents 49% of the breeding herd. The average pigs saved per litter was 11.92 for the September through November period, compared to 11.66 last year.
U.S. hog producers intend to farrow 2.93 million sows during the December 2024 through February 2025 quarter, up slightly from the actual sows farrowing during the same period in 2023, and down 1% from the same period in 2022. Intended sows farrowing for March through May 2025, at 2.95 million sows, are up 1% from the same period in 2023, and up slightly from the same period in 2022.
All inventory and pig crop estimates for December 2022 through September 2024 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data.
Program changes were made following the 2022 Census of Agriculture. As a result of these changes, the following states are no longer published in December 2024: AL, AK, AZ, AR, CA, CT, DE, FL, GA, HI, ID, LA, ME, MD, MA, MS, MT, NV, NH, NJ, NM, NY, ND, OR, RI, SC, TN, UT, VT, VA, WA, WV, WI and WY.
The revision made to the September 2024 all hogs and pigs inventory was 0.5%. A revision of 1.2% was made to the June through August 2024 pig crop. The net revision made to the June 2024 all hogs and pigs inventory was 0.4%. A net revision of 1.1% was made to the March through May 2024 pig crop. The net revision made to the September 2023 all hogs and pigs inventory was 2.2%. A net revision of 2.6% was made to the June through August 2023 pig crop.
A Tale of Two Different Periods
“It’s really been a tale of two different periods in 2024,” Schulz says. “For the first half of the year, we’ve seen sow slaughter up roughly 5%. But then as the latter part of the year came into focus, we’ve seen sow slaughter down notably, especially as we looked at the June-August period, down almost 9%.”
He reminds producers that the industry is comparing this year to very high sow slaughter levels in the second half of 2023. This is contributing to larger year-over-year changes when studying the sow slaughter numbers.
“We also have to take into consideration, there were fewer sow and boar imports, from Canada that were to be slaughtered in the U.S., down roughly 19% for the year,” Schulz says. “That equates to about 75,000 head fewer. Once you adjust for the decline in live hog imports from Canada, the sow slaughter decline in 2024 wasn’t quite as large and is consistent where USDA has estimated the breeding herd.”
A Little Surprise
If there were any surprises in this report, Schulz says the September through November 2024 pigs saved per litter number would have been the biggest surprise.
“If you go back to March through May 2023, we started to see large year-over-year increases, and that lasted into December 2023 through February 2024 and even March through May 2024,” he explains. “As we got into June through August 2024 and started comparing to large litter rates of the prior year, we did see a bit of a slowing increase to productivity. But that wasn’t any indication of lower productivity numbers to come. It’s a result of comparing large levels a year ago. Its hard to break records year in and year out, in anything, especially by a wide margin.”
In September through November 2024, however, the report showed a large 2.2% increase compared to year-ago levels. He says this was much larger than pre-report expectations which had the increase at 0.6%.
“As you think about implications for slaughter into 2025, this report is generally neutral especially in the short-term. It came in line with pre-report expectations for the heaviest two market hog inventories. Medium-term, the report has a bit of a bearish tone given the lightest two market hog inventories came in higher that analysts’ expectations,” Schulz says. “The larger pig crop for September through November 2024, because of larger litter rates, suggests a higher April through June 2025 slaughter. March through May 2025 farrowing intentions, though the first estimate by producers, were much higher than pre-report expectations and would hike up October through December 2025 slaughter.”
Longer-term, the breeding herd remains stable with year-ago levels and suggests no meaningful expansion on the horizon, he adds.
Where Does Profitability Stand for Producers?
Using costs of production figures and futures prices, Schulz says he is looking at profitability in 2024 at roughly break even. In 2025, he estimates a $12 to $13 per-head profit.
“That is coming off of the worst year ever for pork producers in 2023,” he says. “There’s still a lot of financial healing to be done in the industry as indicated by cumulative profits since 2020.”
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