Margins improved over the first half of March as hog prices recovered while the feed markets were mixed. After a recent selloff in the hog market following new life of contract highs, prices began to rise again in the past couple weeks as hog slaughter and pork production continues to trail year-ago levels. USDA reported hog slaughter last week at 2.515 million head, up 2.4% from a year ago although over the past four weeks, hog slaughter was down 0.7% from the comparable period in 2024. In addition, preliminary slaughter estimates have consistently been revised lower over the past seven weeks, most recently by about 15,000 head. USDA’s March WASDE report revised 2025 U.S. pork production down 105 million pounds from the February forecast to 28.44 billion pounds. The entire revision came from estimates for Q1 production, with Q2 expected to be up 2.3% from last year and production in Q3 and Q4 up 3.5% and 4.3% from 2024, respectively. The quarterly Hogs and Pigs report that comes out later this month will shed more light on the Dec-Feb pig crop which will provide further insight into production over the summer. Meanwhile, the market continues to wrestle with the potential fallout from proposed tariffs due to take effect next month on Canada and Mexico. In addition to the fact that 40% of U.S. pork exports go to Mexico, Canada supplies a significant number of
feeder pigs to U.S. finishers. Canadian-origin pigs account for around 5% of total weekly slaughter and exports to the U.S. are around 20% of Canada’s total production. Without much recourse to ship their pigs elsewhere, Canada’s hog production could shrink drastically if a 25% tariff is implemented. Our clients have benefited from recent strategic adjustments to add upside flexibility to existing hog hedges.
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.
