Hog profitability has seen a notable improvement in the past couple of months, marking a positive turn in the industry, as stated by Dr. Steve Meyer from Ever.Ag. The forecast for break-even now stands at $85, indicating a significant recovery.
Dr. Meyer notes the substantial improvement, comparing the current situation to December when he initially estimated a per-head loss of over $12 for 2024. As of last Friday, the figure has turned positive at $1.66 per head. While not a substantial gain, it represents a marked improvement from the previously projected losses.
The industry expert anticipates six months of profitability, acknowledging that the average producer may have costs that are five to six dollars higher. Nevertheless, the overall trend is positive, especially considering the challenges faced in the previous year.
Meyer outlines the key factors that could contribute to restoring profitability: a reduction in costs, an improvement in demand, or a cut in supplies. Encouragingly, the industry is witnessing progress on two fronts, with lower costs and a potential increase in demand.
Lower costs are becoming a reality, with indications from the USDA Ag Outlook Forum suggesting favorable conditions. The projected acreages, yields, and carryout numbers for crops like beans and corn point towards a significant cost reduction, potentially more substantial than in recent times.
On the demand side, Meyer is optimistic about potential improvements. Exports have been strong, and both Global Agritrends and USMEF anticipate a 4%-5% increase in exports this year. Additionally, the strength of the Mexican peso, a significant trade partner, bodes well for exports.
While Meyer doesn’t foresee a reduction in supplies or the sow herd, he points out that productivity is on the rise. The positive trajectory in both costs and potential demand improvements signals a breath of fresh air for the hog industry as it navigates the late winter period.
