Rising Demand and Exports Drive Optimism for U.S. Pork Industry in 2024

Pork/Hogs: The first-quarter commercial pork production is raised 30 million pounds to 7.2 billion pounds on higher-than-expected February production. Total 2024 commercial pork production is expected to be 27.9 billion pounds, up 2.2 percent from a year ago. Live
equivalent prices of 51-52 percent lean hogs are forecast to average about $61 per cwt, 3.7 percent above prices in 2023. Pork exports for 2024 are raised 50 million pounds on strong demand from major importing countries and weakening competitiveness of EU pork due to lower production and higher prices. Total 2024 pork exports are expected to be 7.1 billion pounds, 4.6 percent above year-ago shipments.

Increased Pork Demand Raises Hog Prices

The pace of hog slaughter was higher than expected in February as processors bid up hog
prices in response to wholesalers’ increased demand for pork. February ended with estimated federally inspected (FI) hog slaughter numbers just shy of 11 million head, almost 5 percent higher than a year ago after accounting for the month’s extra slaughter day. The February live equivalent price of 51-52 percent lean hogs averaged $55.24 per cwt, 1.8 percent higher than a year ago. Similarly, processors and wholesalers sold about 2.4 billion pounds of pork—almost 5 percent more than in February 2023—at estimated pork carcass cutout values of $89.14 per cwt, 8.3 percent higher than a year ago. Increased wholesale demand—higher volumes of pork sold at higher prices—likely provided sufficient margin for processors to pay higher prices for larger numbers of hogs.

First-quarter pork production is raised about 30 million pounds to almost 7.2 billion pounds, 1.3 percent greater than a year ago. It is likely that some of the hogs supplying the additional production were packer-sold and packer-owned hogs, whose lower than year-earlier weights─despite lower feed costs this year—suggest that they were pulled forward in response to increased pork demand. It is notable that producer-owned hog weights this year are, so far, above year-ago levels, suggesting an unanticipated run-up in wholesale demand by processors.

Demand for hogs in 2024 is expected to be maintained by continued strength in pork demand. Carcass cutout values for January and February suggest that while not likely to achieve 2021– 22 levels, values should trend above those of 2023. Wholesale pork demand is expected to be supported by high relative retail prices of pork substitutes, generally high grocery prices in domestic markets, and a continued-strong pull from export markets as European exporters become less of a presence, particularly in Asian markets due to lower EU pork production and higher prices.

First-quarter prices of 51-52 percent live equivalent lean hogs are expected to average $55 per cwt, about equal to the same period last year. Second-quarter prices are raised to $65 per cwt, almost 15 percent above the same period last year. Third-quarter hog prices are raised $1 from last month’s forecast to $67 per cwt, more than 3 percent lower than the third quarter of 2023.

The fourth-quarter forecast remains $56 per cwt, almost 5 percent greater than a year earlier. The revised forecasts average to $61, almost 4 percent higher than the average for 2023. Federally Inspected Sow and Boar Slaughter Is Year-Over- Year Higher Through Mid-February It is generally acknowledged that 2023 was a difficult year for hog producers. Iowa State University calculates that monthly producer losses last year averaged more than $24 per head. The December 2023 Quarterly Hogs and Pigs showed a year-over-year reduction in the December 1 breeding inventory of more than 3 percent. Sow slaughter data issued weekly by USDA suggests that reductions in the U.S breeding inventory are likely continuing. For weeks 1–7 of 2024, USDA data show that sow and boar slaughter increased about 5.8 percent over the same period last year. A continuation of the trend established in the first 7 weeks of 2024 would further downsize the inventory of breeding animals. Fewer breeding animals usually means fewer farrowings, which are typically associated with smaller pig crops, depending on litter rates. In general, smaller pig crops usually result in higher hog prices.

U.S. Pork Exports Strong To Begin 2024

U.S. pork exports in January 2024 were about 588 million pounds, almost 6 percent higher than a year ago. As has become customary, shipments to Mexico lead the pack, with 236 million pounds, up 3.2 percent from last year. It is notable that in January 40 percent of U.S. exports went to Mexico. The next-largest buyer of U.S. pork in January, Japan, accounted for 15 percent of exports, less than 40 percent of Mexico’s share. In total, more than half of U.S. pork exports in January were attributable to Western Hemisphere nations. Asia accounted for less than one-third of exports in January, with South Korea standing out, buying almost 52 percent more U.S. pork than a year ago. Data issued by the Government of South Korea shows that import demand, strong in 2023, began 2024 with more than 11 thousand tons of pork exports from the United States, almost 28 percent higher than a year ago. Most E.U. member States exported lower volumes to South Korea in January, with the exception of Spain and the Netherlands. Mostly lower EU exports are probably due to higher production costs, which at this time mostly boil down—directly and indirectly—to higher energy costs. U.S. exports to the 10 largest foreign buyers of U.S. pork in January are listed in the table below, accompanied by country shares of January’s U.S. exports.

On the strength of higher January shipments, first-quarter exports are raised 30 million pounds to 1.795 billion pounds, 7.6 percent higher than a year earlier. Second-quarter exports are expected to be 1.795 billion pounds, 10 million pounds more than last month and about 1 percent higher than second-quarter 2023. The third-quarter export forecast is unchanged from last month at 1.645 billion pounds, 6.6 percent higher than in the same period of last year. The fourth-quarter forecast is raised 10 million pounds to 1.895 billion pounds, almost 4 percent higher than same-period shipments in 2023. Total U.S. pork exports for 2024 are expected to be 7.130 billion pounds, about 4.6 percent higher than exports in 2023.