I’m sure 2023 is a year most hog producers will want to forget. Calculations by Lee Schulz at Iowa State University estimate the typical Iowa farrow-to-finish operation lost $24.10 for each hog sold last year.  That is the biggest annual loss since 2009 when losses averaged $26.04/head. Producers lost money on hogs sold in every month of 2023 except for July and August.

Plain

Dr Schulz and his colleagues estimate the average cost of production in 2023 to be a record $72.98/cwt (live weight) or $97.31/cwt (carcass weight). The cost of production last year was lowest in December at $66.99/cwt (live weight) or $89.32/cwt (carcass weight). It looks like 2024 corn prices will average more than $1 per bushel lower than last year. Hog production costs are likely to be mostly in the upper $60s/cwt (liveweight) this year.

Plain

The liveweight price for 51-52% lean hogs in 2023 averaged $58.57/cwt, the lowest price since 2020. The December price averaged $48.72/cwt, the lowest month since January 2021.

Retail pork prices fared much better in 2023 than did hog prices. The average retail price for pork in 2023 was $4.809/pound, the second highest on record after $4.879/pound the year before. Hog prices were down 17.7% in 2023 and are forecast to be down 1.0% in 2024.  Retail pork prices only declined 1.8% in 2023.

Plain

U.S. pork production was up 1.1% in 2023 and according to USDA’s forecast, production will be up 2.4% in 2024. I find it surprising that pork production is expected to be up 2.4% this year given the enormous financial losses pork producers experienced last year. The apparent reason for the predicted 2.4% increase in 2024 pork production is that large increases in pigs per litter are overwhelming a decline in the number of litters being farrowed. Pigs per litter for the last three quarters have been up 3.27%, 4.31% and 3.92%, respectively. During the previous 12 quarters pigs per litter increased by an average of only 0.13%. Fall 2023, winter, and spring 2024 farrowings are expected to be down 4.0%, down 1.8% and down 1.2%, respectively. This decline is not surprising given all the red ink.

Pork imports were down 13% last year but are forecast to be up 4% this year. Pork exports were up 7% last year and are expected to be up 1.5% this year. The European Union has been the world’s largest pork exporter for several years. For 2023 and 2024 the U.S. and E.U. are both expected to have pork export volume close to 3 million metric tons.

Plain

USDA’s last Hogs and Pigs report said the Dec. 1 inventory of market hogs weighing 180 pounds and up was 102.42% of the same time last year. They said the inventory of 120-179 pound market hogs was 100.72% of the year-ago level. As of yesterday, the December inventory numbers indicated one could expect slaughter to have been up 1.87% since the start of December.

Plain

For the last several quarters hog slaughter has been modestly higher than implied by the quarterly hog inventory survey. It looks like that is also the case for the December survey numbers. Since Dec. 1 hog slaughter has been up 3.02%. This is higher than expected, but how much higher?   

It is often difficult to compare recent hog slaughter to past slaughter levels, especially in January. Winter weather and holidays can have a big impact on just when hogs reach a slaughter plant. This year Christmas and New Years Day fell on a Monday; last year they were both on Sunday. One can adjust for this change.

It is more difficult to know just how much adjustment one should make for weather impact. Hog slaughter for the week ending on December 23, 2023 was up 36.21% largely due to some very cold weather in December 2022. Hog slaughter for the week ending January 13, 2024 was down 19.16% due to bitterly cold weather this month. Do these two weeks offset each other or are there more backed up hogs awaiting slaughter?  

Hog prices continue to disappoint. The lean hog futures contracts for 2024 are currently trading between a low of $70.75/cwt for February and a high of $93.435/cwt for July. Contracts for the first half of 2025 (February, April, May and June) are trading $2-7/cwt above the contracts for the first half of 2024.

Plain

USDA’s Foreign Ag Service is projecting that 2024 world pork production will be down 1% in 2024. Of the three largest producers, pork production in the U.S. is expected to increase, but China and the E.U. are expected to produce less pork than in 2023.  

Barring an unexpected shortfall in hog slaughter, 2024 hog prices are likely to be even with or below last year’s average. For hog producers 2024 financial losses should be less than last year but hog prices are not likely to turn red ink into black.