A 5% increase in year-to-date slaughter due to early first quarter depopulation efforts coupled with average weekly slaughter rates back to normal in recent weeks, suggests U.S. pork packing capacity may be snug come Q4 2024. According to Rabobank’s latest North American Agribusiness Review, YTD barrow and gilt slaughter remains flat, and should trend higher mid-year given anticipated market hog availability.

“Hog prices have responded to stronger packer demand and expectations for limited supply growth, up 21% year-over-year. This price recovery, together with lower feed costs, has restored producer profitability in recent weeks and will remain supportive to margins through Q3 2024,” notes Rabobank analysts.

Pork prices have continued to rise in recent weeks, with the pork cutout reaching $100/hundredweight, a 30% jump YOY. Hams have performed exceptionally well, up 32% YOY, with Mexico taking the brunt of exports to sustain post-holiday markets.

Pork exports kicked off a strong start in 2024, up more than 10% in volume YTD and up 10.4% value YOY. Gains in the Mexico, South Korea, Colombia and Australia markets helped offset weak sales in China, down 21% YOY.

Rabobank analysts noted that pork imports increased, despite a 9% drop in shipments from Canada, the largest supplier to the U.S. Imports from Mexico, Brazil and Denmark rose sharply to start the year.

As for North American production, Mexico has seen limited improvement in hog prices, but producers’ margins are recovering due to a drop in feed costs. Strong U.S. imports could limit additional growth though.

“Ham prices began the year on a downward trend registering a price of MXN 60.50 per kilogram in March, down 11% YOY,” Rabobank analysts stated. “This is in part due to weaker seasonal demand and reflects the increased availability of relatively cheap U.S. imports.”