The swine herd is slightly smaller than analysts expected and that isn’t expected to change much in the coming months but producers continue to profit on razor-thin margins.
“As we put together prices and cost expectations, we’re looking at 2026 of an average annual profit of just over $6 a head,” says Lee Schulz, Chief Economist at Ever.Ag. “That would be the 10th highest return in the last 20 years and the 27th highest annual average return in the last 53 years.”
Profitability pressure is putting a thumb on the decision scale as growers press pause on growth heading into the second half of the year. According to the Quarterly Hogs and Pigs Report from USDA the June 1 inventory of all hogs and pigs totaled 73.7 million head. That is down from June 1 a year ago and also lower than the March 1 report.
“The report is in line with expectations as funds are knocking on the door of record short positions,” says Oliver Sloup of Blue Line Futures. “The report wasn’t a catalyst [for more shorts], but we’ll see how things trade tomorrow [Friday].”
“We would call this report a little bit friendly because of how much this market has sold off in the last few weeks,” says Nick Bork, a risk manager with Professional Ag Marketing. “It certainly isn’t a bearish report with numbers being at 100%. I think the market’s looking for an opportunity to get a little bit of a bounce and this should give it.”
Follow the Numbers
Schulz says it’s clear inventories are tighter than pre-report forecasters expected. Breaking down the inventory numbers further, there were very few significant moves.
- Breeding Inventory: 5.88 million head, down 1% from last year, slightly lower than Q1.
- Market Hogs: 67.8 million head, up slightly from 2025 but slightly lower than Q1.
- Pig Crop: 33.5 million head, up slightly from 2025
- Sows Farrowing: 2.82 million head, down 1% from 2025 (smallest since 2013)
- Avg. Pigs Per Litter: 11.87 in Q2 compared to 11.75 a year ago (new record high for the quarter)
“The pigs per litter coming in at 102% is a big number,” admits Bork. “It’s concerning how they’re getting to that number with all the disease pressure that we’re seeing.”
PRSS and PEDV positivity levels have been higher than a year ago, but helping offset that disease pressure are strong litter rates and good productivity in the sow barn. Litter rate growth is slowing down, but continues to make record highs.
“The last 20 quarters we’ve now seen records or been even with the prior year,” says Schulz.
According to the June Hogs and Pigs Report, hog producers intend to farrow 2.90 million sows in the next quarter. That would be down 2% from actual farrowings during the same period one year earlier and down 3% from the same time 2 years ago.
USDA says farrowings are forecast to continue lower in Q3. It’s predicting September-November farrowing at 2.89 million sows, down 1% from Q3 2025 and 1% lower than two years ago.
Schulz also points to strong feeder pig prices and a surge of imports from Canada.
“Even now [prices have] come down seasonally, but they’re still the 2nd and 3rd highest prices we’ve ever seen,” says Schulz. " I think that’s also suggestive that we have the capacity for those hogs in our finishing space.”
What Does It Mean
Schulz says if you take a big picture view of the current landscape, profitability at $6 per head sits squarely in the middle of the last 10 years. While it’s good enough to hold inventories steady, it isn’t quite strong enough to see producers willing to invest in growth. Right now, as he reads the data, 2027 isn’t encouraging it either.
“We’re expecting about a 1% increase in cost of production and so that’s gonna erode into profitability,” says Schulz. “We’re seeing forecasts that are in the range of 3% decline in prices. The emphasis is that this is a forecast, though, right? We’re gonna see these forecasts change over time. I call this a bit of a bullish report. I think that should provide a little bit of strength to the marketplace.”
As prices stand today, his early look at 2027 puts breakeven levels at about a $2 to $3 loss per head on average for farrow to finish production.
Looking Back to March
The March 2026 USDA Hogs and Pigs Report revealed the U.S. swine industry was facing contracting herds but record-breaking efficiency helped keep inventories stable overall. That was in spite of breeding herd numbers at a decade low (the smallest since 2014).
Highlights from Q1:
- Total Inventory was steady at 74.3 million head (up 0.4% from last year).
- Record Litter Rates: Pigs saved per litter jumped 2.1% to 11.90.
- Market weights were roughly 2 lbs heavier than in 2025, driven by low feed costs and available barn capacity.
- Producers intended to farrow fewer sows in the June-August quarter (down 2% from 2025).
- Operating costs remain 31% higher than in 2020 due to non-feed inflationary pressures.
- Farmers are still trying to recover from losses in 2023 and 2024
What’s Next in 2026?
The next few weeks will also bring some of the hottest temperatures of the year and that’s likely to slow weight gain across the Midwest.
“I’ve heard some packers are backing off kill schedules for next week,” says Bork. “You put all of it together and I really think this market is right for a little bit of a bounce after this report.”
It won’t happen without headwinds. Analysts say demand for hams and bellies is soft from some key trading partners.
“We are seeing in these weekly export reports that Mexico certainly has dropped off a bit from where they were last year and from the beginning of this year,” says Bork. “I think going forward, as we start to reduce kills, we should see some of these primals get a bit of a rebound, especially the big ones like the belly and ham.”
“If we see supplies that are very similar to a year ago level, yet prices are weaker, we have to point to demand that is not as strong as we saw a year ago,” says Schulz. “That doesn’t mean that these fundamentals won’t change, but I think demand is really in the driver’s seat. You have to look at consumer incomes, the impact of higher gasoline prices, and collectively it’s weighed on the market.”
That said, Schulz says there’s still time for the numbers and the data to change in the second half of 2026 but demand will need to be part of the conversation.
