High 2022 prices for hogs and pork are largely attributable to supply factors, unlike 2021, when prices were mostly driven by pandemic-related changes in consumer pork demand, says Mildred Haley, agricultural economist with USDA’s Economic Research Service.
“Pork production for 2022 is expected to decline 2.2% from a year ago, due largely to lower numbers of available slaughter-ready hogs. Hog prices should average about $74 per hundredweight (cwt) this year, almost 10% higher than in 2021. This year’s exports are forecast to decline 6.4% due to reduced Chinese purchases and to the appreciated value of the U.S. dollar,” Haley summarized in the August 2022 Livestock, Dairy and Poultry Outlook.
She said the July 2022 cutout achieved an average value of $120.60 per cwt—the highest since June 2021—up more than 10% from its average value in June after having averaged about $105 per cwt from February through May.
Lower year-over-year monthly hog slaughter numbers were the most important factor driving January–July hog and pork prices. She reported these lower numbers are in line with information reported in Quarterly Hogs and Pigs reports since March 2021.
In the first seven months of 2022, fewer federally inspected (FI) hogs were slaughtered compared with a year earlier. The lower FI pork production followed from lower slaughter numbers from January to April, she explained.
Despite carcass weights averaging higher since February 2022, lower slaughter numbers were keeping production below year-earlier levels through April. Meanwhile, from May through July, higher carcass weights offset lower slaughter numbers, nudging pork production just over year-ago levels, after adjusting for slaughter-day differences.
What Will Happen in the Second Half of 2022?
USDA forecasts for 2022 pork production and hog prices continue to support the scenario of reduced production and higher hog prices, Haley wrote. Pork production in the third quarter is expected to be around 6.5 billion pounds, 1% lower than 2021.
Prices of 51% to 52% percent lean, live equivalent hogs are expected to average $85 per cwt, which is nearly 12% higher than the same period in 2021. In the fourth quarter of 2022, production is likely to be about 7 billion pounds, almost 2% below production in the fourth quarter of 2021. Fourth-quarter hog prices are forecast at $69 per cwt, more than 22% higher than the same period last year.
Haley said the first half of 2023 remains a mixed picture: first-quarter production is expected to increase more than 1%, to about 7 billion pounds, with hog prices also rising about 1% above year-earlier prices to $66 per cwt. However, second-quarter production is expected to be lower, based on the 1%-year-over-year lower set of first-producer intentions stated in the June Quarterly Hogs and Pigs. Second-quarter pork production of about 6.5 billion pounds is anticipated, along with hog prices of $74 per cwt.
