Joe Kerns, president of the livestock division of Ever.Ag began his presentation at the 2024 World Pork Expo by saying, “Good things come to those who wait (or to those who can survive just a little longer).” That’s been the mantra of pork producers for several years, but it set the stage for the less-than-optimistic outlook he and Dr. Steve Meyer, lead economist at Ever.Ag, presented.
Even though it looks like input costs for grain will be lower this year, it’s still early in the growing season and a lot can change in the coming months. But if the weather forecasts for this summer come through, then corn and soybean yields should be very good, which will help producers. There are many variables though, and Kerns said, “On the back of 2023, you could be either side of breakeven, depending on your hedges.”
Meyer agrees. With PRRS being controlled at a higher rate and productivity gains continuing, there’s still a lot of pigs. Productivity gains are the double-edged sword: Full genetic expression can be gained with better health, but that also means more pigs and more pork.
“The number to watch is pigs saved per litter and we’ve been rolling on this number in the last year or so,” says Meyer. Disease pressure and labor issues kept growth flat from 2020 through 2022 but control of porcine reproductive and respiratory syndrome is improving and the labor situation is also better so litter sizes have gone back to the long-term growth trend.
“It was just a matter of time before we went back to the genetic capabilities of the herd,” he adds. “Productivity is going to continue to contribute to output.”
However, there were some bright spots.
• The European Union (EU) is stepping back from exports, due primarily to regulations that limit their growth. The EU has traditionally been first in exports but for the first time since 2014, the U.S. will most likely be No. 1 in exports this year. The U.S., EU, Brazil and Canada control 70% of exports in the world.
• According to Meyer, consumer-level demand will remain below 2021-2022 levels but stay near pre-2021 levels, which were good compared to historical levels.
• Exports remain strong, up 7.6% in 2023 and expected to be up another 9% this year. Mexico is in a “drought like no other,” says Kerns , “so we’ll continue to ship corn to Mexico.” On the other hand, pork exports to China will remain low unless there’s some kind of emergency. China has increased domestic production and prefers to buy feed inputs from Brazil.
• The Section 45Z Clean Fuel Production Credit has real revenue potential for producers, says Kerns. Using Chickasaw County, Iowa, as an example, the spread between synthetic fertilizer and manure yields a 14 point reduction in carbon (CI). That 14 points times 5.4 cents per point equals $.75/bu. A $.75/bushel increase times 250 bushels per acre of corn equals $190/acre manure value. “Carbon offsetting will be much better to the pork producer than anything we’ve had in the past,” he says. “The crop opportunity is $0.054/credit/bushel and this is real money, guys.” The value of manure will go WAY higher, he adds. “If you have manure easements for free, you need to be rethinking those, and the value of the crop ground with manure applied to it just went higher too. We’re starting to see softness in the farmland market but this situation will usurp that. The details of the 45Z will be a pivot point, one way or the other, and this one merits watching.”
As always, good management, smart marketing, and an eye on overall costs will be necessary to compete in a challenging environment.
