Wincing from losses, pork producers pull back from expansion

MCHENRY, Ill. — The first U.S. Department of Agriculture Hogs and Pigs Report of 2023 showed that U.S. pork producers are pulling back on expansion.

“Producers are coming off a recent loss cycle, with breakevens of near $100 per hundredweight. We’re looking at losses from December through February that range from $20 to $35 per head,” said Rich Nelson, chief strategist and director of research at Allendale Inc., a commodities analysis and trading firm based in McHenry.

The release of the first USDA National Agricultural Statistics Service report on hog numbers in 2023 fell on the eve of two widely-anticipated crop reports — the USDA planting intentions report and the USDA quarterly grain stocks report.

The prospective plantings report showed that U.S. corn farmers intend to plant 92 million acres of corn in 2023, a 4% increase from 2022, and 87.5 million acres of soybeans, up slightly from last year.

Nelson said concerns over grain supplies and feed prices also could be a factor holding back expansion in the U.S. pork industry.

The March 30 Hogs and Pigs report showed that producers intend to have 2.93 million farrowings in the March-May period, down 1% from actual farrowings during the same time in 2022.

June-August farrowing intentions were at 2.97 million sows farrowing, down 3% from actual farrowings during the same period in 2022.

“We have planting ahead and the trade is already taking out 1 to 2 million acres of USDA’s numbers, just from ‘North Dakota risk.’ In addition, in general, U.S. agriculture, they are still reluctant to believe that yields will be trend this year,” Nelson said.

“We have missed trend yields for four years now in corn and we have missed them in two of the past four years for soybeans. The trade still has the belief that ‘I have to be shown summer weather before I believe we can get to trend yields.’”

The pullback on farrowing and thus pig and pork supplies going into the summer and fall of 2023 also may reflect concerns about rising consumer prices and inflation and lowered demand for meat.

“Such sentiment seems inline with the USDA’s downward revisions of forecasts of U.S. per capita pork consumption in 2023, previously pegged at 52.1 pounds per person in December and now projected to be about a pound lower at 51 pounds per person,” said Jason Franken, associate professor of agricultural economics at Western Illinois University.

“The December estimate anticipated a return to pre-pandemic levels in 2019 with the current forecast just slightly lower than last year reflecting potential constraints of inflation and rising interest rates on consumer spending.”

One number of note that Franken pointed out, that could balance the lower farrowing intentions, is an increase in productivity as shown by larger pig crop and pigs saved per litter numbers.

The December 2022-February 2023 pig crop was 32.1 million, up from last year’s 31.947 million.

The pigs saved per litter number, 11.02 for December 2022-February 2023, also was an increase from the December 2021-February 2022 period, at 10.95.

“This reflects a new record for the period of 11.01 pigs per litter, more than offsetting a slightly lower number of sows farrowed, 0.31% lower,” Franken said.

Franken said he found the report to be bearish in the near term, but with some hope in the longer term, if producers hold to the lower farrowing numbers.

“There remains room for optimism longer-term, given that lower farrowing intentions indicate hog supplies should remain tight,” he said.

As of March 1, the U.S. all hogs and pigs inventory was at 72.9 million, up slightly from 72.860 million a year ago.

The breeding inventory of 6.13 million, was up slightly from the same time in 2022, when it stood at 6.098 million.

The market herd, at 66.734 million, was up from the same time last year, at 66.591 million.

By weight groups, the market herd numbers were:

• Under 50 pounds — 20.059 million, down from 20.105 million in 2022.

• 50 to 119 pounds — 18.975 million, down from 19.130 million in 2022.

• 120-179 pounds — 14.973 million, down from 14.988 million in 2022.

• 180 pounds and over — 12.727 million, up from 12.468 million a year ago.