January 25, 2021
A new record of 2,829,494 hogs was slaughtered during the week ending January 9, 2021, breaking the old record set in December 2019. Last week’s hog slaughter totaled 2.738 million head, up 1.1% year over year. Since the start of December, hog slaughter has been down 0.9%, which is 1.6% lower than indicated by the December market hog inventory survey.
Commercial hog slaughter last year totaled a record 131.5 million head, 1.6 million (1.3%) more than the year before. Hog slaughter in 2020 was record high for the fifth year in a row.
Commercial pork production in 2020 totaled a record 28.3 billion pounds, up 2.4% year over year. Pork production was 1.1 billion pounds more than commercial beef production. This was the second consecutive year that pork production exceeded beef production. It is expected to do so again in 2021.
Hog weights continue to be heavy. The Iowa-Minnesota-South Dakota live slaughter weight series averaged 293.1 pounds for week ending on January 9, 2021. The weekly national average carcass weight was above year earlier for most of 2020.
Pork exports in 2020 were record high for the fourth consecutive year. Trade data for December 2020 won’t be available until February 8; yet, through November, U.S. pork exports were 5.1% higher than in calendar year 2019, the previous record holder for most exports.
During the first 11 months of 2020, U.S. pork imports were down 5.5% and pork exports were up 17.8%. The decline in imports was largely due to less pork coming in from the European Union.
The increase in exports was entirely due to China. January- November U.S. pork exports were up by 1.006 billion pounds, with shipments to China up 1.131 billion pounds. For these 11 months, the nation exported 6.65 billion pounds of pork and imported 0.83 billion pounds. Imports equaled 3.2% of U.S. pork production and pork exports equaled 25.8% of production.
USDA is forecasting 2021 pork imports will be up 33 million pounds from the year before, putting it back at 2019’s level. USDA is forecasting 2021 pork exports will be down 139 million pounds, making it the second highest on record.
Cost of production is rising fast for hog producers. Cash corn prices in Omaha went above $5/bushel earlier this month for the first time since May 2014.
Calculations by Lee Schulz at Iowa State University estimate losses for hogs marketed in December at $4.40/head. For the year, losses were $2.17/head marketed, the most since 2018.
Cost of production in 2020 was $47.81/cwt. of live weight, or $63.74/cwt. of carcass. This was the highest cost of production since 2015.
The coronavirus caused slaughter capacity to drop last spring, thus 2020 had low hog prices and high pork prices. The average retail price of a pound of pork was $4.12 during December. That was 2.2 cents higher than the month before and 30.9 cents higher than in December 2019. The average retail price of pork in 2020 was $4.029/lb. That was 18.60 cents/lb. higher than the year before and edged out by a penny the old record set in 2014.
The average pork cutout value in 2020 was $77.26/cwt., the highest since 2017.
The average live price for 51-52% hogs was $46/cwt. during December. That was down $4.34 from November but up $3.73 from a year earlier.
The average negotiated carcass hog price in 2020 was $47.30/pound. That was $12.85 lower than the year before and the lowest since 2002. Negotiated hog prices are far below formula prices.
High retail price and low hog price resulted in record-wide margins for middlemen. The farm-to-wholesale spread in 2020 was a record 72.9 cents per retail pound. The wholesale to retail price spread was a record $2.555/lb. pound. Both were records.
The wide spreads came for reduced slaughter capacity due to COVID-19 in plant workers.
Although barrow and gilt slaughter was up only 1% last year, sow slaughter in 2020 was 10.2% higher than the year before. Over the last six weeks of available data, U.S. sow slaughter was up 5.14%. Adjusted for sow imports from Canada, net U.S. sow slaughter was up 5.79%.
The futures market is predicting a typical seasonal pattern for 2021 hog prices, with a peak in July and a low late in the year. It indicates spring 2022 hog prices will be a bit lower than 2021.
USDA is forecasting 2021 pork production will be 1% greater than last year, with hog prices that will be 14.6% above 2020. USDA is predicting 2021 per capita pork consumption at 52.1 pounds, up 0.2 pounds from last year. The combination of more pork and higher hog prices is unusual and is a result of the distortions that COVID-19 injected in last year’s market prices.
This afternoon, USDA will release their monthly Cold Storage report and Poultry Slaughter for December. The January 1 cattle inventory report is scheduled for release on Friday afternoon.
Source: Ron Plain, who is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. The opinions of this writer are not necessarily those of Farm Progress/Informa.
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