20 • URNER BARRY'S REPORTER / VOL. 19, NO. 1 / WINTER 2024
Notably, the number of pigs per litter for June-August was at
11.61 head, up 4.3% from a year ago and a record high. The jump
in sow productivity will largely offset these smaller farrowing
intentions, leading to concerns about continued large supplies in
the near term.
The nation's sow herd suffered significant losses in 2020 and 2021
due to rampant porcine reproductive and respiratory syndrome
(PRRS) outbreaks. Disease pressure has since slowed, contributing
to a rebound in pork production.
Through November 11, year-to-date (YTD) pork production and hog
slaughter was 0.3% and 1.5% higher, respectively, than 2022.
Challenging industry conditions
have also reduced pork
production in Europe and in
Canada. China, a key trade
partner, continues to contend
with African swine fever
complications, which devasted
its hog herd in 2018 and has
since become endemic.
With producers in other areas of
the world exiting the business
because of unprofitable
conditions, global pork supplies
could become tight in the
longer term.
'Til the cows come home…
Beef industry participants could
talk 'til the cows come home about the tight supply situation, the
result of four plus years of drought-induced herd liquidation.
The nation's cattle herd grew to a peak of 94.8 million head in
2019 following a seven-year liquidation that ended in 2014. By
January 2023, the nation's herd decreased by 6% to 89.3 million
head-a 61-year-low.
Reduced cattle availability pushed cash cattle prices to record
territory in 2023. USDA's five area direct live steer averaged
$160.55/cwt in Q1 and $178.28/cwt in Q2, both at seasonal record
highs for their respective time periods.
Returns for producers expanded too, with returns for finishing steer
calves jumping from $144.10 per head in Q2 to $325.56 per head
in Q3, based on research from ISU.
2023 was a year characterized by extreme financial losses for the
nation's hog producers.
The average return to farrow to finish operations in the first half
of the year was minus $34.64 per head, based on research from
Iowa State University (ISU). Producers experienced a brief period
of profitability over the summer but faced losses once again by the
fourth quarter.
The steep losses gripping the hog industry have prompted herd
liquidation efforts since at least this spring, said livestock dealers.
USDA's national weighted average for negotiated hogs was
$72.45/per cwt in October, nearly 20% below the year prior.
Negative returns are likely
spurring additional liquidation
efforts this fall and winter. This
could tighten U.S. hog availability
starting in the spring of 2024.
However, the overall outlook
for 2024 looks bleak, with Iowa
State University forecasting an
average annual loss of $18 per
head next year.
If realized, 2023 and 2024 will
be the worst two-year stretch
for hog production profitability
in history, surpassing the losses
seen between 1998-1999 that
resulted from an imbalance
of supplies for the available
processing capacity.
While feed costs have eased considerably from year-ago levels,
lackluster wholesale values relative to recent years and large hog
supplies have pulled negotiated cash hog prices below producers'
breakeven levels.
Urner Barry's pork carcass cutout value trended below 2021-2022
levels in 2023, which some analysts attribute to slowed demand.
After reaching an annual peak in July, the cutout was pulled lower
by declining prices for items like bellies, hams, and trim.
The USDA September USDA Hogs and Pigs indicated that the
nation's hog inventory was slightly above year ago levels. The
quarterly data suggested that producers intend to limit future
output, with a 1.2% year-over-year (YOY) decline reported in the
breeding herd and a 2.9% YOY decline in farrowing intentions for
June-August.
Thinning the herd…
Gauging beef and pork
supplies in 2024
©Mark Agnor / Shutterstock.com
"The steep financial losses gripping the hog
industry have prompted herd liquidation
efforts since at least this spring."