U.S. pork producers continue to face very high production costs and hog prices that are well below breakeven levels. What does this mean for the future? The remaining 2023 outlook depends on many factors, the National Pork Producers Council (NPPC) reports in its second quarter pork industry economic update that provides a snapshot of top pork industry issues, current trends and market conditions impacting pig farmers.
Though prices and profitability typically follow seasonal patterns, January–February losses averaged $35 per head, which was far below the 10-year average return of about $4 per head for this period, according to estimates by Iowa State University Extension and Outreach.
“The overall profitability picture for 2023 will continue to be determined by domestic and export pork demand, global corn and soybean production (including U.S. weather and planting progress), the price and availability of other meat proteins, and actual pork production levels for the remainder of the year,” the report says.
Producer sold hog prices averaged about $75 per hundredweight for the first three months of 2023, which is well below the estimated breakeven level of nearly $100 for farrow-to-finish producers, the report notes.
A recent USDA report projects the following price and production changes from 2022 to 2023:
• Annual live hog prices down 14.3%
• Annual pork production up 1.4%
• Total red meat (pork and beef) production down 2.1%
As of February, the cost of raising pigs was 13% higher than a year ago and 53% higher than in 2020. The report points out that much of this increase is due to higher feed costs which were up 19% from 2022. USDA’s Grains and Oilseeds Outlook for 2023-2024 is for increased production of corn and soybean meal and lower season-average prices, though current prices remain elevated.
2023 Q2 key takeaways include:
• Pork production increased 2.3% through the first quarter, with the USDA now projecting a 1.4% annual increase in pork production in 2023.
• Retail, wholesale and farm level prices show year-over-year decline.
• Pork and variety meat exports gained momentum in Q1.
• From September 2021 to 2022, the total value of wages paid to workers on U.S. pig farms increased 12.1 percent, while the number of workers declined by 0.4 percent.
• Pork producer returns for the remainder of 2023 will be influenced by various factors, including domestic and export pork demand and input prices.
“The United States is a worldwide leader in pork production and a significant contributor to the U.S. economy,” Duane Stateler, NPPC vice president and pork producer from Ohio, said in a NPPC release. “While many factors can impact our business, especially during this period of high inflation and difficult market conditions, pork producers around the country will continue navigating the economic challenges to ensure we raise safe, wholesome, affordable food for communities here and around the world.”
NPPC’s quarterly reports and new online dashboard track key market indicators and trends that highlight important industry dynamics that impact pork production. The full Q2 economic update report can be found at nppc.org/the-pork-industry/economic-update.
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