CIH Hog Margin Watch: April

Except for the spot Q2 period, forward hog margins deteriorated despite continued strength in exports and the pork cutout as USDA’s April WASDE report featured higher expected pork production through the remainder of 2024 following the March Hogs & Pigs report. USDA revised total 2024 pork production up 180 million pounds from last month to 28.105 billion pounds. This is up from the 27.985-billion-pound production estimate in January after the previous December Hogs & Pigs report, and well above the initial estimate of 27.365 billion released last May. It also is up a significant 789 million pounds or 2.9% from last year, increasing domestic pork per capita availability to 50.7 pounds from 50.6 last month and 50.2 pounds last year. These production updates (if validated by actual slaughter data) confirm a larger inventory this summer and fall than previously expected as increased efficiency in the breeding herd continues to drive higher pork production from lower farrowings. The production estimates for Q3 and Q4 stood out in the April WASDE, up 5.3% and 4.6%, respectively, relative to a year ago and still about 3% higher when adjusting for additional slaughter days this year compared to 2023. Fortunately, exports remain strong with demand from Mexico supporting much of that strength. Export sales to Mexico last week were around 20,000 MT and cumulative sales over the past
three weeks have totaled 75,000 MT. Moreover, outstanding sales to Mexico currently of 88,000 MT represent an 8-week supply which should remain supportive of ham values through the spring and early summer which along with strength in fresh pork values has helped sustain the pork cutout above $100/cwt. Our clients have benefited from newly added coverage in deferred marketing periods ahead of recent deterioration resulting from higher projected pork production.


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.