Lower Inventories Underpin Prices Going Into Spring

Supply of pork in cold storage at the end of January was 10% lower than a year ago and like the tight inventory situation we experienced in 2021 and 2022.


  • Supply of pork in cold storage at the end of January was 10% lower than a year ago and like the tight inventory situation we experienced in 2021 and 2022.
  • Market continues to hold a firm undertone as demand for a range of cuts, especially loins, hams, and bellies, has far surpassed expectations.
  • Futures prices are now at contract highs. Given expected higher prices for hogs in the spring and summer, packers have raised asking prices.
  • USDA made corrections to the weekly export figures reported the previous week. However, overall pork export demand remains robust. Sales to Mexico were over 13k MT last week, putting upward pressure on prices at a time when domestic processors are ramping up production for Easter needs. Ham prices are expected to trend higher through early March.
  • Fat pork trim market is quite weak, in part due to the collapse in the value of animal fats. Lower prices for renewable energy credits are in a big reason for the drop.

Full Report

According to the USDA report released Monday afternoon, the supply of pork in cold storage at the end of January was 468 million pounds, 9.8% lower than a year ago and 10% lower than the five-year average. Normally pork supplies in cold storage increase in the first quarter of the year as packers and end users take advantage of the ample supply to build supplies ahead of the seasonal supply decline in late spring and summer.    Current low inventories have focused the attention of market participants and are part of the reason for the firm prices across a range of products.  A couple of highlights:

  • Belly inventory at 64M was 14% higher than the previous month and above our estimates.  In the last five years inventories increased 13% m/m.
  • Ham inventory was 74.2 million pounds, down 5.5% from last year.   Inventory increased 35% from previous month vs. an average increase of 43% in past 5 years. Inventory of loins in cold storage remains ample, which should help keep prices in check in the near term. Total inventory was 44.4 million pounds, 1.5% lower than a year ago but still as much as 6.7% higher than the five-year average.   Current loin inventories are in line with the previous two years.   Inventory build in January was 5%, far lower than the 24% jump we saw last year.
  • The supply of spareribs remains tight at 89.2 million pounds, down 23% y/y.   There has been a push to build some inventory, which has supported prices recently.  Sparerib inventory increased 11% from previous month vs. an average 8% increase.  Despite these efforts, rib inventories remain below where distributors would like to be come spring.
  • Trim inventory was 48.3 million pounds, down 9.2% y/y.   Inventory increased 2% in January vs. an average 4% decline.

Overall meat protein supplies are also well below both year ago and five year average levels, which should be supportive for prices going into the spring.   The combined inventory of beef, pork, chicken and turkey in cold storage at the end of January was 2.077 billion pounds, 7% lower than a year ago and 5.5% lower than the five year average.   Beef supply in cold storage at the end of January was down 11% from last year and chicken supply was 6.5% lower than a year ago.

Lower Coen Futures set the Stage for Improved Producer Profitability, Helping Set a Floor Under Current Sow Herd Liquidation Cycle

Last week USDA presented its initial outlook for corn supplies in the coming year.   Different from the forecast that will be presented in May, which will incorporate the results of the planting survey, this simply reflects current USDA thinking on the topic. Despite fewer acres expected to be planted this spring, USDA thinks that corn production in the next harvest will once again surpass 15 billion bushels. USDA analysts come to this number by assuming a 3.6 million acre reduction in corn plantings, from 94.6 to 91 million, and a trend yield of 181 bushels per acre vs. 177.3 in 2023. Production numbers need to be viewed relative to expected use. For the 2023/24 marketing year corn production is projected to surpass total use by 787 million bushels or 5.4%. In percentage terms, that is the biggest gap between supply and demand in 20 years. This gap exists even as USDA is currently forecasting a 26.5% increase in corn exports. As a result, 2.172 billion bushels of corn produced in 2023 will be carried over into the next marketing year. That’s a 60% y/y increase. The stocks/use ratio, a measure of supply availability, is expected to be 14.9% this year, the highest it has been since 2018-19.

USDA thinks that the 2024 corn harvest (given current forecasts on acres/yields) will once again surpass total corn use. The expected gap is 335 million bushels, which will be added to carryover stocks. Ending stocks for the 2024/25 marketing year are projected at 2.532 billion bushels and the stocks to use ratio is pegged at 17.2%. One has to go back 20 years to match that carryover level. What does this mean for corn prices? The initial USDA forecast is for corn prices during the 2024/25 marketing year to be $4.4/bu. One issue when comparing corn prices this year or next vs. price/supply in previous years is inflation. Take the top chart. It shows that for the period 2015-2019 corn prices traded in the $3.50 area. With stocks/use ratio now expected to be above those years, shouldn’t we expect corn prices to go back to those levels? In 2023 dollars, prices during 2015-19 were indeed around $4.40-4.50 per bushel, roughly the level that USDA is currently projecting for the next crop. Much will happen in the next few months to affect forecasts. For now, however, futures are signaling that the corn market risks going from boom to bust in a hurry.

Price Chart


Steiner Consulting Group produces the National Pork Board newsletter based on information we believe is accurate and reliable. However neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.