2021 was a phenomenal year for the pork industry, says Brian Earnest, lead economist, animal protein, CoBank. Live hog value as a percent of retail pork value was nearly 35% at one point, a level not seen since the highs in 2014. This year appears set to return similar, if not better, results, he says in CoBank Knowledge Exchange’s quarterly report, as retailers scramble for affordable protein options and exports continue to pressure supplies.
But pork producers aren’t without challenges now, he notes. Labor continues to play a role in reduced pork production as 2022 throughput is down 6% YoY and 7% below 2020 levels. Feeding challenges have been exacerbated by the risk to global grain stocks due to Russia’s invasion of Ukraine.
“While feed costs were up 17% YoY for hog farmers, Iowa State University estimates that farrow-to-finish operations posted a $21.36 per head profit for the month of February, up $15.73 per head YoY and a $24.24 per head gain over the prior month. Hog values have gained about $8/cwt. since February, helping to offset escalating feed costs,” Earnest says.
The lower-than expected U.S. hog inventory in USDA’s March 1 Quarterly Hogs and Pigs Report was more than analyst expectations and the lowest total since 2018 for the same period. The breeding portion of inventory total was down nearly 2% year over year, a five-year low of 6.1 million head, which will limit production growth in late 2022 and into 2023, he says.
Although U.S. exports remain robust. However, with China’s hog prices plummeting to start 2022, China’s share of export sales has declined, Earnest adds.
“Mexico remains a key destination, and took 43% of U.S. exports during January. With EU pork production struggling, and China hogs in liquidation phase, we expect global opportunity will remain robust,” he says.
Despite the challenges, Earnest says prices for livestock, meat and poultry have all continued higher, promoting “cautious optimism” for producers.
“Demand from the food service sector finally looks to be finding consistency after recovering from the omicron wave,” he says. “And as grilling season begins, robust demand is expected to continue pressuring supply despite average retail meat and poultry prices rising 10% in the 12-month period ending February.”
More from Farm Journal’s PORK:
The Global Agricultural Supply Chain: A New Battlefield
Sustainability: It’s More than a Buzzword in Animal Agriculture
McDonald’s Calls Icahn Demands on Sourcing Pigs Unfeasible, Expensive
