We recently received all first-quarter data used to compile the financial results for the Compeer Financial Swine Producer Index. The U.S. swine industry has shown steady financial improvement through the first quarter of 2026, supported by disciplined cost control and modest gains in hog prices. Year-to-date (YTD) results reflect a return to profitability and continued strengthening of producer balance sheets, although the pace of recovery from the 2023–24 downturn varies across operations.
Perspective from World Pork Expo
While attending the World Pork Expo in Des Moines, I was asked why the industry did not appear to rebound more strongly based on year-end 2025 financial results. It’s a fair question and one that requires looking beyond the surface-level data.
Several factors help explain the year-end financial results.
1. Tax planning strategies, particularly deferrals and prepaid expenses, can significantly influence financial statements. These strategies often increase an operation’s reported asset base at year-end, which in turn puts pressure on the owner’s equity ratio. While this does not reflect weaker operational performance, it can make balance sheets appear less improved than expected.
2. Not all operations experienced the same level of financial recovery in 2025. Disease challenges, including PRRS and other health issues, affected some producers more than others. These disruptions can reduce productivity, increase costs and ultimately weaken financial performance, creating variability across the industry.
3. Some operations took proactive steps during the downturn by injecting capital or utilizing subordinated debt to stabilize their businesses. As conditions improved, many withdrew that capital after reaching financial goals. While financially prudent, those decisions can slow the visible rebound in equity when viewed at an aggregate level.
Together, these factors help explain why equity recovery may appear slower in year-end data than many producers expected. For that reason, I typically focus more closely on second- and third-quarter performance, where tax impacts are minimized and financial statements more accurately reflect operational results.
Earnings Performance
Year-to-date profitability has returned, although margins remain relatively tight. The average profit per carcass hundredweight (cwt) was $2.62, which equates to approximately $5.63 per head based on a 215-pound carcass hog.
While modest, this represents a meaningful improvement from recent periods of breakeven or negative returns, which is typical for the first quarter. Stability in feed costs combined with incremental improvements in hog prices has allowed producers to regain profitability. These results highlight the continued importance of efficiency, cost control and strong production management.
Financial Position and Liquidity
Financial fundamentals across the database remain solid.
- Owner’s Equity: As of March 31, average owner’s equity stood at 56%, reflecting a well-capitalized sector capable of managing continued volatility.
- Working Capital: Working capital per sow averaged $1,033, indicating strong liquidity and the ability to withstand cyclical swings in input costs and revenues.
These metrics demonstrate that most producers have maintained financial discipline and preserved balance-sheet strength despite recent challenges.
Industry Outlook
Looking ahead, the industry appears positioned for continued stability, although margins remain sensitive to feed costs, market hog prices and herd health challenges. Export demand and domestic consumption trends will continue to play an important role in determining price direction.
Operations with strong liquidity, higher equity levels and disciplined financial management will be best positioned to navigate uncertainty and capitalize on opportunities.
Overall, year-to-date performance reflects cautious optimism. Profitability has returned, and the industry remains fundamentally sound, even though year-end 2025 financial statements may not fully reflect the pace of recovery.
Encouragingly, we have seen significant improvement in balance sheets during the first quarter of 2026. Owner’s equity has increased from 51% to 56% year over year, signaling meaningful progress in rebuilding financial strength through first-quarter profitability and the unwinding of tax-planning strategies. With solid equity levels and working capital exceeding $1,000 per sow, producers are entering the remainder of 2026 on firm financial footing.
Final Farewell
After serving the swine industry as a lender for Compeer Financial for nearly 30 years, this will be my final Money Matters article as I look forward to retirement. I wanted to share a few takeaways based on my experience as a lender in the industry. First, this industry remains remarkably resilient. I’ve worked through three major downturns, and it has consistently returned stronger each cycle. Second, producers who adapt to change and embrace new technology continue to grow and expand—the level of continuous improvement across the industry is remarkable.
Most importantly, the relationships built throughout my career have been the most rewarding part of my career and will continue to be valued moving forward. I have always been proud to be a part of the U.S. swine industry, which provides a high-quality, affordable protein to consumers both domestically and around the world.
