CIH Hog Margin Watch: April

Hog margins fell during the first half of April as gains in deferred lean hog futures contracts were offset by rising feed costs in both corn and soybean meal. USDA released on April 8 its monthly WASDE report. Pork production for 2022 was lowered by 240 million pounds to 27.075 billion pounds. The revision was primarily due to results from last month’s Hogs and Pigs report, which indicated March-May farrowing intentions were expected to be 1.5 percent lower than a year ago. Year-to-date, hog slaughter is down 6.1 percent and pork production is 6.0 percent lower. WASDE reduced pork exports on tight supplies and strong domestic prices while imports were raised. Despite an increase in pork imports, total supply of pork on the domestic market was reduced by 0.8 percent and disappearance was reduced to 51.0 pounds per capita. If realized, this would be the lowest per capita pork disappearance since 2018. Total pork exports in February were estimated at 486.2 million
pounds, down 105 million pounds or 18 percent from last year. Year-to-date, exports are 201.4 million pounds below a year ago, with nearly all of the decrease coming from exports to China. Exports to Mexico are 124.7 million pounds higher through the first two months of the calendar year but were not enough to make up lower Chinese demand. Inflation continues to hammer the U.S. economy and meat retail prices are not immune. March bacon retail prices were once again near all-time highs of $7.20 per pound. This was 1.5 percent higher than February and 23 percent higher than a year ago. Boneless ham prices set an all-time high at $5.15 per pound. On the feed side, both corn and meal continued to
trade higher in response to the ongoing war in Ukraine and uncertainty surrounding global feed grain supplies. Attention will be paid to next month’s WASDE report, which will provide the first look at USDA’s new crop balance sheets. Our clients added coverage in deferred marketing periods with flexible strategies that will allow for further margin improvement over time.


The Hog Margin calculation assumes that 73 lbs of soybean meal and 4.87 bushels of corn are required to produce 100 lean hog lbs. Additional assumed costs include $40 per cwt for other feed and non-feed expenses.