How long will profits last?

USDA is forecasting 51-52% lean live hog prices will average $4 higher this year than last and $2.50 lower this year than in 2025.

Ron Plain, Professor Emeritus

May 27, 2024

4 Min Read
National Pork Board

Economists at Iowa State University calculate that the typical Iowa farrow-to-finish hog operation had a profit of $11.92 per hog marketed during April. That was the first profitable month for Iowa hog operations since August. Cost of gain was estimated at $65.09/cwt liveweight ($86.78/cwt of carcass weight). April profits were $61.39/hog higher than the losses incurred in April 2023.

Roughly 60% of the profit improvement was due to higher hog prices and 40% due to lower cost of production, primarily cheaper feed. Hog profits are likely to last through summer with red ink returning in the fall.

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Hog slaughter over the last 12 weeks has averaged 0.1% below the same period in 2023. USDA’s March Hogs and Pigs survey implied slaughter during this period would be up 0.1%. That is a very close miss. If USDA’s March hog inventory numbers are correct, hog slaughter should be up 1.5% during June-July-August.

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The average price for 51-52% lean market hogs was $64.82/cwt during April, the highest month since August. April hog prices were up $4.98/cwt from the month before and up $13.15/cwt from a year ago. As the chart shows, thus far in 2024 hog prices have moved steadily higher and are currently above both last year and the 5-year average. USDA is forecasting 51-52% lean live hog prices will average $4 higher this year than last and $2.50 lower this year than in 2025. The lean hog futures contracts imply that prices this summer will be slightly higher than last and that hog prices will average a bit higher this summer than they will next summer.

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Retail pork prices are up, but less than the amount of inflation. The average price of pork at retail was $4.814/pound during April. That was 2.1 cents higher than the month before and 8.7 cents higher than last April. Retail pork prices in April 2024 were 1.8% higher than last April but 1.5% lower when adjusted for inflation. The inflation adjusted retail pork price has fallen short of matching inflation every month since May 2022. Retail pork demand is down year-over-year. The farmer’s share of the consumers’ pork dollar was 23.4% during April, the highest month since August.

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USDA is forecasting a slightly lower corn price for the upcoming marketing year ($4.40 for 2024-25 vs $4.65 for the current market year vs $6.54 for the previous year). The futures market seems to be more optimistic. Currently the July corn contracts are trading at $4.64 for 2024, $5.11 for 2025 and $5.14 for 2026. USDA is forecasting 2024 corn production will be lower than last year but higher than in 2022. Corn futures contracts for the rest of 2024 are currently trading between $4.64 and $4.88 per bushel. 

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USDA expects U.S. 2025 pork production will be 1.2% higher than this year and this year to be 2.8% higher than last year. Hog prices are not likely to move a great deal higher as long as pork production is moving up.

During the first quarter of this year 25.4% of U.S. pork production was exported and pork imports equaled 4.2% of U.S. production. First quarter pork imports were up 4.8% and exports were up 8.1%, year-over-year. USDA expects pork imports this year to be up 5.2% from 2023 but 2.2% less than the forecast for 2025. USDA expects pork exports this year to be up 6.5% from 2023 but 4.6% less than in 2025. Export pork demand is up.

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Annual per capita pork consumption is expected to remain between 50 and 51 pounds per capita.

During the first 19 weeks of 2024 sow slaughter was 3.5% above last year’s pace. Year-to-date sow slaughter is up 3.5%, but barrow and gilt slaughter is only 0.3% higher than last year.  The March breeding herd was down 2.1% year-over-year.  The higher sow slaughter may be an indication that the breeding herd is continuing to decline.

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Federally inspected barrow and gilt dressed weights in the first four months of 2024 averaged 214 pounds, down one pound from the year before.  With hog prices rising and feed costs declining, hog weights are likely to increase relative to last year.  Seasonally, slaughter weights are almost certain to decline with the arrival of summer heat then rebound with cooler weather this fall.

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About the Author(s)

Ron Plain

Professor Emeritus, University of Missouri

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