Jim Long Pork Commentary, U.S. Market Grinds Along, January 22nd 2024


The U.S. market grinded along last week with average producer owned hogs averaging 72.30¢ lean a lb. With cost of production farrow to finish in the 89¢ lb. range, red ink in the range of $40 per head continues.

A feed salesman we know said to us last week. His main job now is trying to collect money and the other listening to his customers asking him if he can find buyer for their pig farm. The historic losses in the $30 per head range the last 15 months has drained producers financially and emotionally. There is little optimism there is hope on the horizon with only 3 months in the next twelve in lean hog futures over 90¢ lb i.e., breakeven.

These factors we believe have the US-Canada sow herd continuing to shrink. The USDA December 1 inventory indicated the US breeding herd was 5.999 million down 206,000 from June 1 inventory of 6.206 million. There is no reason in our present economic conditions to believe the breeding herd is not grinding down at a similar rate.

Factors such as record sow mortality of 14.6% for 2023, huge prolapse issues (Prolapse Is Coming) continuing in late stage gestation leading to continued culling, less gilt retention and wholesale herd liquidation we believe is cutting the herd by 8-10,000 a week lessening the production capacity of our industry each and every day. There have been productivity gains due to less PRRS activity but no way that can compensate for the decrease of production capacity.

A positive in our opinion U.S. pork cut-outs are at 88.56¢ lb. last Friday. When considering the huge weekly slaughter of 2,652,000 last week it reflects pork demand holding. Pork exports continue strong with latest week 31,380 metric tonnes (about 1500 tractor trailer loads). We believe as slaughter numbers decline seasonally combined with depleted supply, prices have a great opportunity to push slaughter prices over $1.00 lb. and back into producer profitability.

Other Observations

  • USDA continues to project U.S. beef production down about 1 billion lbs. in 2024 compared to 2023. Choice beef cut-outs last Friday $2.95 lb, pork 88.56¢ lb. Less beef is certainly going to hold beef price levels high in 2024 helping to pull pork prices higher. We need it but it’s sad we languish at 1/3 of beef values as we continue to miss the main driver of consumer demand taste. Our legacy of chasing the other white meat mantra has destroyed our best eating attributes.
  • The U.S. chicken industry was losing money. They were getting (whole bird composite) price around $1.13 lb. cutting production they have moved price to $1.29 lb. Supply management has worked.

Our observation for Germany despite record prices in 2024. The legacy of the financial losses in the prior years, draconian animal welfare in antibiotic legislation, ongoing labour and generational issues, African swine fever difficulties is not leading to renewed expansion. We expect this to continue making Germany a domestic supplier and no longer a major player in global export markets.

  • Last week a sign of the times at Tyson Madison, Nebraska. Snowstorm. Employees able to show up. Hogs able to show up. Minor detail USDA inspection team no show. Everything at standstill costs go up by the minute. Lots of action from State Senator Mike Flood, calls to Washington. Finally, inspectors show up. Sad testimony of bureaucrat work ethic. Like to know what NPPC did or is doing to support plants and producers to keep chains moving. They had time to have their annual Marco Island, Florida get together (Davos of the Pork Industry). Where is the action plan to address demand? Profitability? Seems lots of money for trips of bureaucrats while producer’s bleed.

Iowa Pork Congress

We will be at the Iowa Pork Congress this coming week. This is the premier state winter swine event. We will report next week on our observations on the state of our industry from the perspective of people we talked to.