USDA’s Economic Research Service recently shared the September 2023 outlook for pork and hogs, following a slightly lower month of pork production in August.
Federally-Inspected Hog Slaughter
In federally inspected hog slaughter, an estimated 11.1 million head traveled across the rail, which was 1.3% higher than last year with the same number of slaughter days. Meanwhile, pork production totaled 2.3 billion pounds, which was fractionally lower than a year ago.
The report notes the increase in slaughter numbers was offset by continued-lower average dressed weights, with the August average at 207 pounds per head, 3 pounds lower than weights in Aug. 2022.
While summer weather regularly decreases dressed weights, average dressed weights have been staying below year-ago levels for almost all of the 2023—likely due to poor producer returns, notes the report.
Prices in August
Prices for live equivalent 51 to 52 percent lean hogs averaged $71.51 per head last month, which was 16.5% lower than last year, says the report.
The wholesale pork carcass cutout value in August was lower than last year by 9.5% at $105.91 per cwt.
As hog prices declined faster than pork product prices, the report notes processors’ spreads widened, averaging $26.86 per head. This was 39% higher than last year’s processors’ spreads at $19.31 for the same period.
Overall, hog prices in 2023 have traded below 2022 levels—also below most producers’ costs of production—and with the upcoming fall and winter months, slaughter numbers typically increase as hog prices seasonally decline.
The report explains how consumer pork demand in 2023 was complicated by new state laws that aim to regulate pork sales within state borders, such as California’s Proposition 12.
Third- and Fourth-Quarter Pork Production Expected Lower
Lowered by 65 million pounds, based on lower-than-expected slaughter numbers and average dressed weights, third-quarter 2023 pork production will total approximately 6.4 billion pounds, 1.8% below last year.
Lean hog prices for the third-quarter were also lowered to $69 per cwt., which is 14% below last year, based on weaker-than-expected wholesale pork demand.
Fourth quarter has been lowered by 40 million pounds, totaling nearly 7.1 billion pounds, which is 2.3% greater than last year’s production for the same period. Hog prices are forecast at $59 per cwt., about 7% below last year, mainly due to larger supplies of slaughter-ready pigs.
Pork Exports
July U.S. pork exports totaled 505 million pounds, up 4% from last year, fueled by shipments to Mexico and Canada.
Exports to Asia were generally weaker than anticipated, notes the report, which may have been partially due to strong Brazilian sales to the region.
Another factor could be the appreciation in the U.S. dollar, as summarized in the Federal Reserve Band’s Broad Dollar Index, and the fact that U.S. pork buyers are more than likely aware that a year-over-larger March through May pig crop will shortly become slaughter-ready, explains the report.
Accounting for 91% of the month’s exports, the top 10 largest foreign destination countries for July 2023 are listed in below.
Second-half 2023 pork export forecasts decreased, accounting for lower July shipments, says the report.
Third-quarter exports are revised lower by 100 million pounds to 1.6 billion pounds.
Fourth-quarter exports are lower by 25 million pounds to 1.8 billion pounds total.
Both third- and fourth-quarter exports are expected to remain above last year’s levels, at 2.4% and 7.1% higher, respectively.
Total exports in 2023 are expected to be 6.8 billion pounds, up 7.2% year-over-year. Likewise, exports in 2024 are forecast to reach 6.9 billion pounds, up nearly 1.5% from 2023.
Upcoming Quarterly Hogs and Pigs Report
Detailing Sept. 1 hog and pig inventories, as well as farrowings, pig crop numbers and the associated litter rate for the June through August quarter, USDA’s Quarterly Hogs and Pigs report is set to release on Sept. 28, 2023.
