Iowa State University’s calculation of hog profitability held steady in July at $14.85 per hog marketed. This was the same as the month before and up $5.46 from a year ago. July was the fourth consecutive profitable month following seven months of red ink.

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The year-over-year improvement in hog profits is roughly 72% due to falling production costs and 28% due to higher hog prices. In April-July 2024, the four recent profitable months, the average profit was $39/head higher than the same period last year; the hog price was $4.38/cwt of liveweight higher and the cost of production was $11.25/cwt of liveweight lower. 

The economists at ISU estimate the cost of production for typical Iowa farrow-to-finish hog operations at $65.05/cwt of liveweight in July, down $0.24/cwt from the month before and down $10.65/cwt from a year ago. The cost decline is mostly due to falling feed prices. Cash corn prices have dropped a great deal in the past year. The farm price for corn averaged $6.44 per bushel in the first seven months of 2023 and $4.42/bu in January-July 2024.   

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The outlook is for low feed prices to continue. The September and December 2024 corn futures contracts are trading under $4/bushel and the 2025 corn futures contracts are currently trading between $4.09 and $4.33 per bushel.

USDA says the average farm price for the 2022-23 marketing year was $6.54 per bushel. They estimate the 2023-24 marketing year average at $4.65/bu and are forecasting the 2024-25 year at $4.20 per bushel.

Soybean prices often go up and down with corn prices and soy meal prices usually track with soybean prices. USDA says that soybean meal averaged $452 per ton in the 2022/23 marketing year, $390 in 2023/24 and is forecasting soybean meal at $320 per ton for 2024/25. 

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During July the average liveweight price for 51-52% lean hogs averaged $64.95/cwt, down $0.65 from the month before and down $8.97 from a year ago.

In the first 33 weeks of 2024 the base hog carcass price was $84.14/cwt, up 54 cents from the year before.

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Federally inspected hog slaughter over the last 12 weeks was up 2.24% compared to the same weeks last year. The slaughter forecast based on the June Hogs and Pigs market inventory was for up 2.19%. USDA’s market hog numbers have been remarkably accurate in recent years. Any miss by less than one percentage point is excellent. This summer USDA has been off by 0.05 percentage points. If the Hogs and Pigs report numbers continue to be spot on then September hog slaughter is expected to be up 1.2% and October-November slaughter up 1.4% year-over-year.

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During July the average retail price for pork was $4.922 per pound. That was up 4.2 cents from the month before and 21.8 cents higher than a year ago. Grocery store pork prices are likely to continue to move higher for the next few months. The seasonal peak in retail pork price tends to come three months or so after the peak in cash hog prices. In late summer and early fall, retail pork prices usually go up, reducing the quantity of pork that consumers purchase. In the fall weekly pork production usually goes up, putting more pork on the market. This combination is tough on hog prices, thus they usually decline in the fall.

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Hog slaughter weights are usually heaviest in the winter and lightest in the late summer. Pigs don’t like heat and grow more slowly when the weather is hot. Through July federally inspected barrow and gilt slaughter weights have averaged 213 pounds, the same as last year.

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Year-to-date sow slaughter is up 0.7%. Over the last 10 weeks sow slaughter has been down 8%. The big drop is due in part to fewer Canadian sows coming south.

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Hog imports are increasing. In the first half of 2024 live hog imports were up 4.1%. But, over the last 10 weeks feeder pig imports have been down 9%. Last year the U.S. imported 6.7 million live hogs. This year we expect that number to approach 7 million head.

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International pork trade is increasing. In the first half of 2024 U.S. pork exports were up 3.2% with less pork being shipped to Japan, Canada and China and more U.S. exports to Mexico, South Korea, Australia and Colombia. In the first 6 months of 2024, U.S. pork imports were up 6.0% with each major pork supplier except Canada and Mexico shipping more pork to the U.S.

In the first half of 2024 pork imports equaled 4.3% of U.S. pork production and pork exports equaled 25.8% of U.S. pork production. USDA is forecasting a slow increase in pork imports and a faster increase in pork exports for 2023-2025.

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Outlook

The futures market expects hog prices to trend lower until the end of the year then increase until July 2025.  No surprise there. The futures contract prices for the October, December and February 2024-25 contracts are slightly higher than for the corresponding contracts 12 months later.

USDA is predicting that 2024 pork production will total 28 billion pounds, up 2.7% from last year with a further increase of 1.8% coming in 2025  They expect hog prices to be up a bit this year but to be lower next year than in either 2023 or 2024.

They expect per capita pork consumption to increase 0.8 pounds this year to 51 pounds and to be 51.3 pounds next year. Increasing per capita consumption is negative for prices.