Pork Producers Navigate Challenges With Record Productivity, Rabobank Report Reveals
The September USDA Hogs and Pigs report revealed stable inventories consistent with a year ago and a 1.2% decrease in the breeding herd. Yet, a remarkable 4.3% year-over-year increase in record quarterly pigs per litter, Rabobank shares in a recent Global pork quarterly report, can be attributed to improved herd health and strategic culling of less productive sows. Expected to drive higher productivity in 2024, producers adjusted farrowing intentions lower by 5.1% in the fourth quarter of 2023 and 1.5% year-over-year in the first quarter of 2024, Rabobank adds.
Despite these gains, challenges persist. Slaughter rates remained unchanged, but lower weights limited production gains. Seasonally larger supplies are expected to pressure hog prices, Rabobank says, resulting in industry losses and continued herd liquidation.
Lower feed costs following the U.S. grain harvest may help improve 2024 producer returns, but could also lead to slow herd reductions, adds Rabobank.
Pork values faced a significant downturn, with ham values plummeting by 19% year-over-year, adding pressure to the market. Meanwhile, belly and loin values remained consistent with a year ago. Rabobank says retail and foodservice demand is volatile, with National Pork Month promotion and lower cold storage inventories (down 13% YoY) helping stabilize the market in the near term.
Further upside in prices is expected to be limited with the enforcement of California’s Proposition 12 at year-end and with ample pork production through the fourth quarter.
On the international front, exports remained steady, totaling 226,519 metric tons of pork and pork variety meats in August. Key markets such as Mexico, Canada, and Japan showed resilience with increases of 7%, 11%, and 11% respectively, offsetting declines in exports to China.
Pork exports are expected to remain steady through the remainder of 2023, Rabobank says. However, growing frozen inventories, a weak demand in some markets, and a strong U.S. dollar pose potential challenges to future exports.
