Pork/Hogs: The December Hogs and Pigs report showed 1 percent more market hogs than a year ago and just 2 percent fewer breeding animals. Adjusting quarterly pork production forecasts to information in the report resulted in a 2024 production increase of 180 million pounds, with an increase of more than $4 per cwt in average 2024 hog prices. Strong February pork exports prompted the addition of 210 million pounds to the 2024 export forecast. U.S. pork exports in 2024 are expected to be 7.3 billion pounds, almost 8 percent higher than last year.
March Hogs and Pigs Report Shows That Litter-Rate Growth Can Offset Farrowing Declines To Increase Pig Crops
The Quarterly Hogs and Pigs report issued by USDA on March 28, 2024, provided much- anticipated information pertaining to changes in animal numbers since the last report in December. The report gave an indication of the total herd size with a breakdown—74.6 million head of hogs in total, up about 1 percent from a year ago, with the breeding inventory down just 2 percent and with market hog numbers up about 1 percent.
Market hog numbers in the report’s weight categories—which often foreshadow slaughter timing and dynamics—suggest that the processing of the two heavier weight categories will supply slightly fewer numbers of market hogs in the first half of 2024. Based on the average weight gain in hogs, those in these weight categories are likely from 2023 pig crops from the summer (June–August 2023, +2.8 percent higher than a year earlier) and fall (September–November 2023, +0.3 percent above a year earlier). Animals tabulated in the March report, combined with increased numbers of Canadian hogs and pigs imported during the first-quarter of 2024, have already resulted in a first-quarter commercial pork production volume of 7.1 billion pounds, about 1 percent above a year earlier. A similar set of conditions—a slightly higher fall 2023 pig crop and increased Canadian imports—should result in second-quarter 2024 commercial pork production of about 6.7 billion pounds, about 1 percent higher than a year earlier.
The December–February pig crop and some of the September–November pig crop are reflected in the two lighter weight class categories of the March report. Each of the two lighter categories shows pig numbers about 1 percent higher than those of the previous year. The balance of the fall pig crop and some of the December–February pig crop—almost 2 percent higher than a year earlier—will be processed in the third quarter of this year, when pork production is expected to be 6.9 billion pounds, more than 5 percent higher than a year ago. Expected increases in average dressed weights due to lower feed costs are also expected to contribute to higher third-quarter pork production.
The lightest weight category—under 50 pounds—includes late-born pigs from the December– February pig crop, as well as imported Canadian piglets. The inventory also pegs this component of the market hog inventory at 1 percent higher than a year earlier.
The report published a second set of farrowing intentions for the March–May 2024 quarter
indicating that producers intend to farrow about 1 percent fewer sows than a year earlier. If
producers follow through on their intentions, increases in litter rates and assumptions for higher average dressed weights to account for lower seasonal grain costs are expected to yield a fourth-quarter commercial pork production volume of about 7.5 billion pounds, an increase of almost 5 percent above last year’s fourth-quarter production.
Surging Litter Rates Are Making a Habit of Offsetting Lower Farrowings
What has been notable from the March–May quarter of 2023 through the December–February 2024 quarter is the year-over-year decline in sow farrowings. The average year-over-year farrowing reduction for this period was 2.1 percent. Lower year-over-year farrowing numbers, holding everything else equal, tends to yield lower pig crops. Over this same period, however, litter rates increased sharply to a point where—even when combined with falling farrowing numbers—the resulting pig crops averaged 1.84 percent higher, year over year. This was the case in December–February 2024. The March report showed farrowings down by 2.6 percent, while litter rates set a record for the quarter at 11.53 pigs per litter, all resulting in a pig crop that was almost 2 percent higher than a year earlier. Projecting the relationship between litter-rate growth, sow inventory size, farrowing rates, and pork production into the future would imply that as litter rates continue to increase through such technical innovations as improved genetics and better herd management, strong breeding inventory increases may not be necessary to meet increased pork production goals. Swine diseases remain wild cards, however, that continue to be dynamic factors affecting the U.S. hog production industry, with the potential to disrupt
positive litter-rate trends.
Strong Pork Demand Holds Hog Prices Above Year-Earlier Prices
The chart below shows weekly estimated wholesale pork carcass cutout values for the years 2021–2024. Higher cutout values for the years 2021 and 2022 likely reflect the effects of Government responses to the pandemic, including restrictions of citizens’ movement, restricted commerce, paucity of available consumer goods, and significant Government transfer payments, all of which contributed to elevating demand for available retail pork cuts. The cutout returned to earth in 2023, meaning that the weekly values of the 2023 cutout exceeded same- week values of the 2021 cutout just three times and never exceeded same-week values in 2022. Numerous rationalizations could account for the drop-off last year. Among them was that as the economy reopened consumers resumed pre-pandemic spending habits and patterns that often tilted away from pork. This tendency caused hog prices to fall almost 13 percent from their 2021 average and caused most U.S. hog producers to operate below break-even levels last year.
In 2024, through week 14, the cutout has averaged $90.15 per cwt, up almost 10 percent
compared with the same period last year. Among the possible factors contributing to the pork price rebound is the high cost of groceries in general due to inflation. High beef prices due to extended drought, in particular, may also be inducing some consumers to substitute pork in place of more expensive beef cuts. Foreign demand for U.S. pork is also supporting wholesale prices. Through February, U.S. pork moved out of the United States to foreign destinations at a brisk pace. The January–February export total this year is more than 11 percent higher than a year ago. Higher U.S. exports are likely due to the turbulence in the European pork sector that is causing some prominent importing countries to opt for greater imports of U.S. pork.
Because demand for hogs derives from demand for pork, when pork demand increases—as it has in the first quarter of 2024 (both the volume of pork supplied and wholesale prices
increased, 0.4 percent, and 9 percent, respectively), a parallel dynamic occurs in the hog
market. This was the case in the first quarter. Estimated federally inspected hog slaughter
increased almost 1 percent, while prices of live equivalent 51-52 percent lean hogs averaged $54.97 per cwt, about 0.3 percent above the same period a year ago.
Weekly average live equivalent 51-52 percent lean hog prices
Total pork production in 2024 is expected to be about 28.1 billion pounds, 2.9 percent above production in 2023. Quarterly hog prices are expected to average about 7.5 percent higher than 2023 prices, largely because pork presents a reasonably priced protein available in a persistently inflationary environment. Anticipated prices for live equivalent 51-52 percent lean hogs for the balance of 2024 are as follows: second quarter: $68 per cwt, 20.0 percent higher than a year ago; third quarter: $72 per cwt, 3.9 percent above a year earlier; and fourth quarter: $57 per cwt, 6.4 percent above prices in the fourth quarter of 2023. Higher pork production, accompanied by higher hog prices, points to increased pork demand in 2024.
2024 Quarterly Pork Export Forecasts Raised on Strong February Data
U.S. pork exports in February were 593 million pounds, almost 18 percent higher than year-ago volumes. By far the largest foreign market in February was Mexico, which purchased more than 200 million pounds of U.S. pork, up 22 percent from last year. The appreciated peso (the U.S. dollar was 8.3 percent cheaper in peso terms in February) was likely useful in maintaining export volume flows of the U.S. pork cut favored by Mexico: fresh bone-in hams. In February, those cuts were priced 6 percent more than a year ago.
Listed below are the 10 largest foreign destinations for U.S. pork in February. It is notable that 57 percent of U.S. exports in February went to Western Hemisphere nations. Mexico alone accounted for 37 percent of February shipments.
Following the strength of February data, quarterly forecasts for 2024 pork exports were revised upward. The first quarter is raised to 1.850 billion pounds, 10.9 percent higher than a year ago; the second quarter is increased to 1.840 pounds, 3.2 percent above the second quarter of 2023; and the third-quarter forecast for this year is raised to 1.7 billion pounds, 10.1 percent higher than a year ago. For the fourth quarter of 2024, exports are expected to be 1.95 billion pounds, 6.9 percent greater than fourth-quarter 2023 shipments. The total for the revised 2024 quarterly forecasts is 7.3 billion pounds, about 7.7 percent greater than exports in 2023.
