Domestic Pork Supply Expected to Remain Stable, Offer Retailers and Foodservice Operators the Ability to Manage Features and Menu Prices

Highlights

• USDA forecasts a modest decline in per capita availability in 2025 but still near the long run average of the last 15 years.
• Hog slaughter has been steady in the last four weeks. Expectations are for slaughter to be a bit lower in June and July but up 1.5% to 2% from a year ago.
• Belly prices have yet to show any upward momentum. Prices are substantially higher than a year ago (+60%) and this has had an impact. But the slowdown in foodservice sales is also a factor as is the relatively large supply in cold storage.
• Ham prices have been volatile, largely driven by inconsistent sales trends to Mexico. The weaker peso may have been a factor but largely the slowdown in sales in early May reflects the impact of higher prices. Expectations are for prices to stay firm in June and July as overall supply declines.
• Pork trim values hold a firm undertone and expected to trend higher in June and July.

Full Report

USDA projections of beef production have been off due to the inherent uncertainty about the timing of herd rebuilding. But it has been far more successful in projecting beef production and coming up with a per capita availability number for pork in 2024. While the availability forecast for 2024 has been revised slightly in the last 12 months, it is still expected to be up 1.2% compared to 2023. USDA is currently forecasting US pork production for 2024 to be 28.079 billion pounds, 761 million pound (+2.8%) vs. a year ago. Much of this y/y increase (642 million pounds) is expected to happen in the second half of the year.

Q3 production is forecast up 5.1% and Q4 is forecast up 4.4%. One thing to consider when we look at the y/y comparisons is that both Q3 and Q4 have one more marketing day than a year ago. If we adjust for the extra marketing day, production would be up 3.4% and 2.7% in those two quarters. The pig crop for Dec-Feb was 1.9% higher than a year ago, which might support the view for slaughter during Q3 to be up near 2%. Hog weights in Q3 of 2023 were down 1.5% and they were down 0.6% in Q4. USDA is likely projecting weights to return to pre-2023 levels, which would explain that lofty production forecast. As for 2025, the initial forecast is for pork production to increase 336 million pounds (+1.2%) and per capita availability to stay above 50 pounds, near the long-term trend.

Near Term Supply Based on March ‘Hog and Pigs’ Report

Hog slaughter continues to trend seasonally lower and should be even lower in June and July. Last week at 2.404 million head slaughter was almost the same as a year ago. In the last four weeks, slaughter has been a total of 9.564 million head, just 37k head (-0.4%) lower than last year. Since the first week of March, hog slaughter has been 0.2% lower than a year ago. This is very much consistent with the latest USDA ‘Hogs and Pigs’ survey, which had the total inventory of hogs over 120 pounds slightly lower than a year ago. Those are hogs that have been coming to market between early March and last week. Will the survey continue to hold for Jun-Aug? The inventory of market hogs under 120 pounds on March 1 was estimated up 1.5% vs. a year ago.bThe pig crop for Dec-Feb was estimated up 1.9% y/y. Both these estimates tell us we should expect more hogs. In June of 2023 weekly slaughter averaged 2.345 million head/week (4 weeks) and in July the numbers weren’t much different at 2.353. The March survey says we should expect weekly slaughter this year for June and July to be somewhere around 2.38-2.39 million head/week. Short holiday weeks will create some volatility so it’s good to keep that in mind. Going into a short slaughter week the tendency is for cutout values to be higher earlier in the week as market participants look to get their needs covered/delivered early.

Don’t forget to pay close attention to weights. The above chart is our daily tracking of average barrow/gilt weight reported in the MPR system. It tends to function better during this time of year than the initial USDA estimate. Last year hog carcass weights, especially weights of producer owned hogs, started to decline in mid-April and were sharply lower in June. So far weights have been stable and if they trend above year ago, it could add more pounds in addition to the expected higher slaughter.

Price Chart

Forecasts