The room was packed despite it being a beautiful day during World Pork Expo in Des Moines, Iowa. Both Lee Schulz, chief economist at Ever.Ag, and Joe Kerns, founder of Ag Rubicon, expressed economic optimism for the pork industry. However, the prospects for producer profitability sound less sunny than the sky outside.
Pork Demand and Prices On the Rebound
Consumer demand is still below 2020 to 2024 levels but it’s recovering. Compared with historical numbers, though, demand is still good, Schultz assures. The story behind demand is affected by many factors, such as consumption, price and consumer income.
The importance of these factors, namely consumer income, is shifting, which is good for the pork industry. Pork still has a highly advantageous cost spread with beef and a much steadier supply due to the contraction in the cattle cycle.
“I think the industry is in a much healthier spot today [for supply] than maybe it’s been the last couple of years because we squeezed out some of that excess capacity,” Schulz says.
Summer cutout prices should be strong, he adds, with a predicted 4% increase versus a 3% increase in 2024. Schulz emphasizes that prices, even in recent years, have been in the top 10 historically. However, profitability is a different story.
“2023 will go down as the worst year in pork producer profitability to date at over $30-per-head loss. 2024 was roughly breakeven. 2025 we’re seeing about a $15-per-head profit. If this proves true, it will be the quickest turnaround in pork producer profitability ever. But it says much more about how bad the situation was in 2023 and 2024 than it says about 2025.”
Why were those years so bad? It’s simple — costs.
While consumers have been paying higher prices for pork, that price increase remains consistent with inflation. Input costs, on the other hand, have exceeded the inflation rate all along the value chain. Costs are still 32% higher than they were in 2020.
Production costs have fallen slightly, by about 2% recently, but Schulz doesn’t predict costs to go much lower.
He sees breakeven costs in the mid $80s.
Steady Inventory But Larger Quantities
However, with favorable weather predicted in the Corn Belt, Kerns assures: “Right now, there is no reason for a pork producer to panic about grain prices. We are not going to have another ethanol binge. Corn exports look to be contained by both waning world demand and Brazilian production.”
Despite higher costs, pork producers continue to produce more with less. Productivity gains keep pig and pork supplies growing.
“We’re at a very steady inventory level, yet we continue to produce larger quantities of pork available not only domestically, but also for our export customers through increases in carcass weights and increases in litter rates,” Schulz explains.
Trade policies will continue to keep the pork industry guessing when it comes to exports.
“The volatility in Washington makes it tough for the United States to gain confidence as a predictable supplier,” Kerns says.
Many trading partners’ currencies are strengthening in relation to the U.S. dollar, so increased buying power might help soften export disruptions.
The industry’s forecast might be slightly cloudier than the sunny day outside during the World Pork Expo, but at least the clouds are starting to clear from the past two years.
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