The surprise in Thursday’s USDA Hogs and Pigs Report is the breeding herd failed to increase. At 5.93 million head, the drop is despite robust producer margins, prospects of ample feed supplies and some of the lowest feed costs in more than a decade, when adjusted for inflation, according to Altin Kalo, chief economist at Steiner Consulting Group.
Analysts thought the herd would be a little more than 6 million head, Kalo says, which would still be 0.5% lower than last year, but it would imply an increase of around 35,000 head from the June breeding herd. Instead, the breeding herd as of Sept. 1 was 15,000 head lower versus June (and USDA even revised and lowered the June figure).
Rather than keeping a few more gilts, it appears retention was less than the sows producers culled.
“Clearly, it was a surprise that goes counter to expectations for more pork supply due to lower feed costs,” Kalo says.
When Chris Ford, vice president corporate swine lender with Farm Credit, was reviewing the September numbers, the first thing that jumped out at him was the under 50 lb. and 50 to 119 lb. weight groups. He expected those two categories, which came in at 21,662 head and 19,667 head, respectively, to be much higher this September versus a year ago at 22,194 and 20,132, respectively.
“We have seen and heard of improved health across the industry, which is fairly typical for summer months,” he says. “I think this is the biggest takeaway because those are the animals that will be driving the supply chains in quarter four of 2025 and quarter one of 2026.”
Margins are solid today, and considering the industry is on the cusp of new crop corn, Ford expects to see an impact from improved average daily gain and increased supply.
“Harvest season is upon us and we all understand the importance of the corn and meal prices and how quickly that impacts profitability, or lack thereof, within the pork industry,” Ford says. “USDA has given us their estimates for what this crop will be, but until the grain is in the bin we aren’t going to know the true impacts of cost of production into 2026.”
Revisions Made to Previous Reports
What was not a surprise, Kalo explains is that USDA went back and revised figures previously reported.
“The number of hogs that came to market this past spring and summer was far smaller than what the previous inventory surveys indicated,” he says. “Thus, June 1 hog inventory was revised down by 1.42 million head, a 1.9% downward revision. March 1 inventory was also revised lower by 750,000 head.”
Kalo says additional takeaways from the report include:
- This winter and next spring, the pork supply will be lower than a year ago.
- The number of pigs produced in June, July and August was 2.6% lower than a year ago. “The smaller breeding herd and a lower farrowing rate than last year could not overcome previous productivity gains,” he says.
- The decline in the June to August pig crop will impact slaughter during December, January and February.
- The smaller breeding herd on Sept. 1 also means there will be fewer farrowings during this period. “Last year pigs per litter in September to November was up 2.2% year or year, far above trend,” Kalo explains. “This year pigs per litter could be flat to only slightly higher. The result implied by the survey is that slaughter next spring may be down year over year, which again runs counter to expectations.”
Profit Picture for 2026
As Ford visits with producers and travels the country, he says nobody has forgot where the industry was fewer than 24 months ago.
“Quarter four of 2022 to quarter four of 2024 was undoubtedly the most difficult period in the industry for nearly 20 years,” he says. “There are many components that drive volatility — health/production, feed costs, trade/tariffs and continued rising wages and other costs. We as an industry need to remain vigilant to laying off as much of that risk as possible but continue to find areas to participate in the volatility.
“There is near-record high participation from outside funds in the market and paying close attention to the managed money and how long will they stay long will be critical,” Ford adds.
On the heels of the September Hogs and Pigs Report, there are other factors impacting the pork industry. For example, exports have seen a dip with continued tariff uncertainty. However, Ford says trade partners in Mexico and Latin America have been strong partners, so keeping an eye on exports remains key as one-third of U.S. pork products are exported.
The tight supplies and historically low cold storage levels are continuing to support current price levels, but he adds seasonality, increased supplies, improved efficiencies and uncertainty in trade could apply pressure at the end of 2025 and into 2026.
The good news, Kalo summarizes: “With no growth in supply expected, hog prices should remain well supported. Combined with lower feed costs, this sets the stage for another profitable year in 2026.”
He also points out USDA reports have produced wide swings in expectations.
“Producers may want to take advantage of the potential rally that may follow the bullish results from this report and manage price risk for next winter and spring,” he suggests.
If your comfortable with their health status and pig flow, Ford encourages revisiting your risk management plan and consider protecting the bottom side.
“Utilizing the risk management tools that we have at our disposal will help protect these margins going into these months that traditionally aren’t moments of profit,” he says. “Every operation is different, and everyone is different in their risk tolerance, but at least knowing the opportunities currently being presented is critical to sustainability and leveling out the highs and lows.”
