US pork industry sees production tide turning

KANSAS CITY — The US Sept. 1 all hog and pig inventory and market hog inventory peaked at 78,583,000 head and 72,153,000 head, respectively, in 2019 but have been on a steady decline since, according to data from the US Department of Agriculture. Though far from record highs, Sept. 1, 2023, inventory levels are estimated up slightly from a year ago due mainly to record-high quarterly pig crops. The increase, though, doesn’t signal a return to profitability or intentions to increase hog production by producers.

The Sept. 1 all hog and pig inventory was estimated at 74,319,000 head, up 2.2% from June 1 and up 0.3% from a year earlier. The market hog inventory was estimated at 68,241,000 head, up 0.4% from a year ago.

Pre-report was called a “mild surprise” based on trade expectations for all hogs and pigs that ranged from 0.2% to 1.9% lower from a year ago and for market hogs that ranged from unchanged to also down 1.9%.

The numbers that make up the major categories of all hogs and pigs and market hogs showed a mixed picture of producers’ hog production intentions.

The USDA said the US breeding hog inventory was down 1% from both last year and from the prior quarter. September-November sow farrowing intentions were down 5% from actual farrowings in the same period last year. December 2023-February 2024 farrowing intentions were down 1% from the same period last year and were down slightly from two years ago. Actual March-May sows farrowing were down 2% from a year earlier, and June-August farrowings were down 4%. Those numbers indicate producers still are not rushing to rebuild hog herds.

Offsetting the lower farrowing numbers were record-high pigs per litter, which in the June-August quarter were up 4.3% from a year earlier at 11.61. Pigs per litter have been record high for at least the last four quarters, including September-November 2022, while sows farrowed and farrowing intentions generally were below year-earlier levels.

“Hence onward marches the ever upward trend in pigs per litter,” Jason Franken, School of Agriculture at Western Illinois University, said in the Oct. 2 farmdoc daily report. “The barely larger pig crop should lead to marginally larger slaughter this winter.”

The USDA in its Sept. 12 World Agricultural Supply and Demand Estimates report lowered from August its forecast of 2023 US pork production due to expected lower slaughter numbers and lighter carcass weights in the last half of the year, although full-year production still was forecast up 0.6% from 2022. Pork production in 2024 was forecast at 27,350 million lbs, unchanged from August but also up 0.6% from 2023.

“While hot summer weather nearly always curtails hogs’ appetites and reduces dressed weights, average dressed weights have been below year-ago levels for almost all of 2023, likely due to poor producer returns,” the USDA said in its September Livestock, Dairy and Poultry Outlook.

The USDA raised its forecast of 2023 US pork imports from August and lowered its forecast of pork exports on weaker global demand. Pork imports in 2023 were forecast up 2.2% from August but down 18% from 2022, with 2024 imports unchanged from August but up 4.5% from 2023. US 2023 pork exports were forecast down 1.8% from August but up 7% from 2022, with 2024 exports lowered 1.1% from August but up 1.5% from 2023.

“Taking all this into account, prices over the next four quarters seem unlikely to exceed costs of production around $99 per cwt,” Mr. Franken said. “However, if current gains in pigs per litter do not persist to offset intended cuts to farrowings, then higher prices may be realized.”

The USDA noted that lean hog prices in August were down 16.5% from a year earlier, while the wholesale carcass cutout value was down 9.5%. With hog prices declining faster than wholesale pork prices, processor margins widened in August and were up 39% from a year ago, while hog prices were below 2022 levels and were below cost of production, fundamentals that do not encourage producers to expand production.

Strong pork exports and minor increases in supply jostled forecasts for US per capita pork supplies. The USDA forecast 2023 per capita pork supplies at 49.8 lbs, up 0.2 lb from August but down 1.3 lbs from 2022, with 2024 per capita supplies at 49.8 lbs, up 0.3 lb from August and unchanged from the current year.

In contrast, per capita beef supplies in 2023 were forecast at 57.6 lbs, down 1.5 lbs, or 2.5%, and in 2024 at 53.8 lbs, down 3.8 lbs, or 7%, from 2023. Per capita broiler supplies in 2023 were forecast at 100.1 lbs, up 1.2 lbs, or 1.2%, from 2022, and at 100.6 lbs in 2024, up 0.5 lb, or 0.5%. Total per capita poultry supplies, forecast at 117.9 lbs in 2024, would surpass total red meat supplies of 105 lbs by 12.9 lbs, or 12%, if realized.