USDA will publish the results of their June hog inventory survey this coming Thursday. I expect it to show a slightly larger swine herd than at this time last year with the market hog inventory up 2%. This will keep pressure on hog prices in the second half of 2024. I expect the report to show farrowing intentions for the summer and fall to be down a bit over 1%. This creates potential for reduced hog slaughter in the first half of 2025; depending, of course, on what pigs per litter does to the size of the pig crop.

The pigs per litter number is difficult to forecast. Farrowings tend to track with lagged profitability. PPL is impacted by herd health and weather. For the last four quarters, ppl has averaged 4% higher than a year earlier. Over the previous 12 quarters ppl averaged only 0.1% above the year-ago level. I have no good explanation for this dramatic increase.

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In the spring of 2023 March-May ppl was a record 11.36 head. That was up 3.27% year-over-year. That record was broken the next quarter when June-August ppl was 11.61 head. A new record of 11.66 ppl was set in the fall. The number of pigs per litter is usually lower in the winter. December-February ppl averaged 11.53 head. I’m going with a forecast of 11.63 pigs per litter for March-May, an increase of 2.4% from last spring and up 0.9% from the previous quarter. This may seem a small increase but my forecast is 5.7% more than two years earlier. That is the biggest two-year increase since March-May 2016 when herds were recovering from the PED virus.

The huge financial losses hog producers suffered in 2023 are the primary reason for the declining breeding herd. Each month economists at Iowa State University estimate costs and income for Iowa hog farms. Their calculation put 2023 losses at $23.10 per hog marketed. Their latest calculations put the profit for hogs marketed in May at $17.06 per head. May was only the fourth profitable month in the last 19 months.

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Iowa State’s calculated cost of production for hogs marketed in May was $64.78/cwt (liveweight) or $86.38/cwt (carcass weight). May’s cost of production was lower for the 13th consecutive month. The reason for the decline in cost of production is falling feed costs. Corn prices started 2023 above $7 per bushel and ended the year under $5 per bushel. This year Omaha corn has been averaging close to $4.50 per bushel. Corn futures contracts are trading under $5 per bushel through December 2027.

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Sow slaughter has increased this year. Thus far in 2024 sow slaughter is up 3% while barrow and gilt slaughter is up less than 1%. Increased sow slaughter would imply fewer litters farrowed; provided, of course, gilt retention doesn’t increase.

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It is likely USDA’s June report will make some small upward revisions to the March hog survey estimates. Hog slaughter during March-May was up 0.33%. The market hog inventory on March 1 implied spring hog slaughter would be up 0.13%. That is an extremely small miss. Since the first of June, hog slaughter has been up 2.3%. The March Hogs and Pigs Report indicated slaughter would be up 1.5%. This is not a big miss but is enough to justify some small revisions. 

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As it does most years, the peak in 2023 hog prices occurred during the summer. The negotiated base carcass price for market hogs reached $106/cwt during late July 2023. This year hog prices are yet to reach $100/cwt. Last week negotiated hog carcass prices averaged a bit under $90/cwt, roughly the same as a year ago. The futures market is expecting hog prices to trend lower for the rest of the year.

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USDA is predicting 2024 pork production at 28.104 billion pounds (up 2.9% year-over-year) and live hog price at $61.24/cwt up 4.5% compared to 2023. Higher pork production and higher hog prices aren’t the usual combination.

USDA forecasts 2025 pork production at 28.4 billion pounds up 1.1% and 51-52% lean hogs at $60/cwt, down 2.0% from this year.

The average liveweight price for 51-52% lean hogs in May was $66.16/cwt. This was 19.5% higher than a year ago and the highest month since August 2023 averaged $71.51/cwt. 

The pork supply depends not only how many hogs we slaughter, but also on what those hogs weigh. The long-term trend has slaughter weights increasing by an average of one pound per year. Weights fell short last year and may do so again in 2024. Red ink is not conducive to heavy slaughter weights. Last year hog slaughter was up 2.1% but due to lighter slaughter weights pork production was only up 1.1%. USDA is expecting a 2.2% increase in pork production this year and a 2.0% increase in hog slaughter which works out to a 0.1% increase in weights.

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Four years ago, when China was struggling with an outbreak of foot-and-mouth disease, they were by far the largest foreign buyer of U.S. pork. But now, their purchases are back to pre-outbreak levels. U.S. pork exports are increasing thanks to Mexico. Most months Mexico buys more than 200 million pounds of U.S. pork and often twice as much as Japan who is the second biggest buyer.

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During the first four months of 2024 the U.S. exported $815,625 of pork muscle cuts and variety meats to Mexico, $496,365 to Japan, $354,909 to China, $316,507 to South Korea, and $273,349 to Canada.

Although hog prices have been disappointing, pork prices at the retail level have been strong. During May retail pork prices were 4.0% higher than last year. During the last 12 months retail pork prices have increased more than chicken but less than beef.

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