USDA thinks pork production in 2025 will increase 1.7% from a year ago. Lower feed costs should help bolster production, but much will depend on the breeding herd in September and December as productivity rate returns to long term trend.
Highlights
- USDA thinks pork production in 2025 will increase 1.7% from a year ago. Lower feed costs should help bolster production, but much will depend on the breeding herd in September and December as productivity rate returns to long term trend.
- Pork supply should be ample this fall. Hog slaughter was above 2.5 million head for the second consecutive week and hog carcass weights are running about 2% above last year.
- Increase in production and slowdown in export orders has put some downward pressure on export products, especially hams. However, market sources indicated that the lower prices helped clean up much of the supply. With two short slaughter weeks coming up due to Labor Day, availability is expected to be more limited and higher prices are expected, especially for hams, loins and picnics.
- Belly prices have eased lower as August retail features are now in the rear view mirror. Futures currently imply lower prices for bellies in Q4 although above year ago levels.
- Trim prices have started to ease lower and expected to decline further in the fall on higher supply. Frozen trim trading at a big premium due to high cost of boxing/freezing.
Full Report
In its latest update USDA pegged pork production for 2025 at 28.565 billion pounds, half a billion pounds (+1.8%) higher than in 2024 and 1.2 billion pounds (+4.6%) higher than in 2023. Considering the trend for pork prices in both 2023 and 2024, the USDA supply forecasts offer pork buyers some comfort that both availability and pricing will be favorable in the coming year. We are not convinced that pork production next year will increase to the degree that USDA thinks. Indeed, we are doubtful if production will increase at all. Key in that assessment is the expected size of the breeding herd and productivity. The issue of productivity is important and demands its own discussion. But suffice to say that we do not think pigs per litter can increase at +3% rate that has been the case the last 12-18 months. Rather, we think productivity will return to the long run trend of about 1% growth.
The breeding herd on June 1 was estimated at slightly above 6 million head. This is at about the same level it was last December and 3.2% lower than in June 2023. The smaller herd all but assures that farrowings and pig crop will be lower during the Jun-Aug quarter. But will the breeding herd be lower than a year ago in September? We think so, with our initial estimate at 6.03 million head, 2.4% lower than last year. Sow slaughter has been running lower than a year ago. Since June, weekly sow slaughter has been 8% lower than a year ago. But it’s important to remember that the breeding herd is smaller than it was last year and a return to a more “normal” culling rate necessarily implies lower slaughter. This does not mean producers are looking to increase the size of the herd. The chart to the right shows both the inventory level and the ratio of weekly slaughter to the inventory at the start of each quarter. Current ratio is lower than last year but at the long run trend.
In the near term, however, pork supply is expected to remain well above year ago levels. The hogs coming to market this fall were born last spring. In its June survey, USDA noted that the Mar-May pig crop was estimated 1.8% above the previous year. So far this summer hog supply has been higher than earlier estimates so it is possible that fall production may outpace estimates as well. Additionally, the average weight of barrows and gilts is currently running as much as 2.5% above year ago levels. Starting from such a high base and the prospects of ample/less expensive feed, expectations are that weights will trend higher through the end of the year. Hog futures have rallied this week but the true test for the market will come later in the year as slaughter bumps up against capacity constraints. Bottom line: The price outlook in the near term is positive for pork buyers but, despite lower feed costs, we would be cautious about counting on significant price declines in 2025. The September breeding herd will be closely watched.
Cold Storage Inventory Declines in July Despite Higher Slaughter/Production than a Year Ago
The supply of pork accumulated in the spring was well below normal and pork supply has continued to decline through the summer months. At the end of July, total pork inventory was 450.7 million pounds, 4.3% lower than last year and 10.3% lower than the five year average. Pork inventories declined 5% in July from the previous month compared to an average drawdown of 1% in the last five years. Exports have been good but not exceptional so the high drawdown rate at a time when pork production was well above year ago levels suggest relatively strong movement through domestic channels. Belly inventory at the end of July was 42.7 million pounds, a 30% drawdown for the month. This was the biggest July drawdown since 2015 and offers hope that maybe bacon product movement has started to improve at retail and foodservice. Ham inventory seasonally increases into the fall as processors and end users accumulate product for the holidays. At the end of July the supply of hams in cold storage was 1.2% higher than last year but 8.5% lower than the five year average. July inventory build was higher than last year but in line with historical precedent.
Price Chart
Forecasts
Content reshared courtesy of the Pork Checkoff, Des Moines, Iowa
