Navigating Swine Markets: A Comprehensive Outlook and Export Surge in 2024

In January 2024, the swine industry witnessed a remarkable shift, with pork belly prices driving the estimated wholesale carcass cutout to levels surpassing the previous year. This surge, not observed since December 2022, propelled the average cutout value to $87.01 per cwt, marking a substantial 7.4 percent increase from January 2023.

However, as the month progressed, a reversal occurred. Seasonally rising hog prices and a tempered ascent in belly primal values led to a decline in processors’ gross spreads by the end of January. While still higher than late January 2023, this shift highlighted the dynamic nature of the market.

The analysis reveals the pivotal role of the belly primal in this scenario, contributing $5.47 or 91 percent to the $5.97 year-over-year cutout difference. The other components of the cutout made minor contributions, emphasizing the singular impact of pork bellies on the overall market dynamics.

Looking ahead to 2024, the report forecasts improving pork demand as a key driver for hog prices. The first quarter anticipates a convergence of strong belly prices and a slower slaughter pace, pushing 51-52 percent lean hog prices to $55 per cwt. The second quarter projects stable commercial pork production but foresees a 9 percent increase in hog prices due to growing demand.

While higher production in the third quarter may lead to a slight drop in hog prices, the fourth quarter is expected to see prices rise by almost 5 percent, supported by improved domestic demand and competitive pricing in foreign markets. The report underscores these factors as crucial for hog prices in the fourth quarter of 2024.

Additionally, export projections for 2024 are revised upwards based on higher-than-expected shipments in the fourth quarter of 2023. December 2023 exports totaled approximately 644 million pounds, with Mexico emerging as the leading buyer. The shift away from European pork by countries like South Korea and Australia contributed to this surge.

Quarterly pork export forecasts for 2024 show a positive trajectory, reaching approximately 7.1 billion pounds, a 3.8 percent increase from 2023. This suggests that a significant portion, 25.4 percent, of U.S. commercial pork production will be exported. The combined production and export forecasts, along with expectations for changes in pork stocks, imply a retail per capita disappearance of 50.7 pounds, reflecting a 1.02 percent increase over 2023.

In essence, the swine industry in 2024 is poised for dynamic changes, driven by shifting market dynamics, export surges, and the evolving landscape of pork demand.