Margins finished 2025 with continued strength on a combination of slightly higher hog prices and flat to slightly lower feed costs. USDA’s December Hogs and Pigs report was considered bearish relative to pre-report analyst estimates, with hog inventory higher than expected although the breeding herd showed no growth signaling producer caution with expansion despite historically strong margins. All hogs and pigs on December 1 were reported at 75.545 million head which was up 0.6% from last year compared to the average forecast of a 0.9% reduction from 2024 with a range of estimates expecting supply to be down anywhere from 0.3% to 1.7% from a year ago. By category, inventory levels
were all above the range of estimates except for hogs in the 50-119 pound bracket which were just above the average forecast. The breeding herd at 5.952 million head was down 0.9% from last year when on average the market was expecting a 1.2% reduction from a year ago with a range of estimates anticipating a decline of 1.0% to 1.8% from 2024. September-November farrowings and the Sep-Nov pig crop were 0.3% and 0.4% above a year ago, respectively, while both Dec-Feb and March-May farrowing intentions were above the range of forecasts at 101.9% and 102.0% of last year when on average the market expected farrowing intentions to be even with a year ago. This seems to signal
that productivity gains are likely to be the source of future growth in the market hog supply. USDA’s December Cold Storage report showed frozen pork inventories at the end of November totaled 371.3 million pounds, down 20.5 million or 5.2% from last year. Our clients continue adding coverage further out on the curve in Q4 2026 and even Q1 2027 with historically strong margin opportunities presenting early.
The Hog Margin calculation assumes that 73 lbs of soybean meal and 5.3 bushels of corn are required to produce 100 lean hog lbs. Additional assumed costs include $44 per cwt for other feed and non-feed expenses.
Hog Margin Watch reports are provided by CIH. Click here to see CIH Hog Services.
