High hog prices squeeze pork processors: USDA ERS

Pork processors will likely pay higher hog prices through yearend due to lower supplies of slaughter-ready hogs, while confronting consumer resistance to pork price increases, according to USDA’s Economic Research Service.

Combined, these factors will continue to pressure processors’ price spreads, the agency said in its latest Livestock, Poultry and Dairy Outlook report.

Weekly values for processors’ spreads this year were below the same-week values of 2021 in 28 of the first 43 weeks of 2022. This year, the average value of the spread through week 43 has been about $33 per hog, whereas last year over the same period the average was almost 20% higher, at about $41 per hog. For October, the spread averaged about $38 per hog, almost 29% below the same-period spread last year.

Fourth-quarter pork production is projected at almost 7.1 billion pounds, about 2% below production a year ago. Processor efforts to strengthen processing spreads by slowing weekly slaughter numbers are likely to be mostly offset by seasonal increases to average dressed weights. Fourth-quarter prices of 51-52% live equivalent hogs are expected to be $64 per cwt, almost 14% higher than hog prices a year ago.