Hog Margin Watch: May Margins continued to strengthen over the first half of May with an ongoing combination of higher hog prices and lower feed costs. Deferred
hog contracts in December and February rallied to new life-of-contract highs, improving profitability in both Q4 and Q1. USDA released the May WASDE report which updated supply and demand forecasts for pork. 2026 pork production was forecast at up 1.3% from 2025 at 28.4 billion pounds, compared to the current estimate for this year at 28.0 billion. 2026 pork exports are forecast to be just above 9.6 billion pounds, down 0.9% from 9.7 billion estimated for the current year. 2026 pork imports of almost 6.5 billion pounds are also forecast to be down slightly from the current year by 0.7%. While pork exports have been holding up well and helping to support cutout values, there are growing concerns
due to trade uncertainty. March pork exports totaled 218,468 tons, an increase of 8,741 tons or 4.2% higher than last year with total exports for Q1 down just 0.1% from last year. Most of the strength in exports resulted in strong demand from Mexico, with March shipments up 12.6% from last year and representing 38% of total U.S. pork exports for the month. Weekly export data for April however shows shipments of pork muscle cuts down 26.4%, with lower shipments to Mexico due to the late timing of Easter and shipments to China down 65%. Since the onset of the trade war with China, the value of front and hind feet has dropped sharply by 43% and 58% from a year ago, respectively. While making
up only 2% of the pork cutout value, frozen swine feet are the largest pork variety export item with China taking 91% of total exports last year.Our clients continue to extend forward coverage in deferred periods following the recent margin improvement.
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.
Hog Margin Watch reports are provided by CIH. Click here to see CIH Hog Services.
