Steady U.S. hog inventory: Second-quarter report brings little change

STILLWATER, Okla. — A second quarter U.S. Department of Agriculture Hogs and Pigs report held few surprises for producers and traders.

“I would say this is an ‘as expected’ Hogs and Pigs report. There just isn’t much change,” said Steve Meyer, senior economist for Ever.Ag.

Meyer spoke as part of a Pork Checkoff-sponsored webinar following the release of the June 27 report.

The U.S. hog inventory, as of June 1, stood at 74.5 million. That is up 1% from a year ago.

The breeding herd stood at 6.01 million, down 3% from last year. The market hog herd was at 68.5 million, up 2% from last year.

The March-May pig crop was 34 million, up 2% from a year ago. June-August farrowing intentions are 2.96 million, down 3% from actual farrowings a year before.

September-November farrowing intentions are 2.94 million. That is down 1% from the same period a year ago and down 5% from the same period two years ago.

One number that did come as a surprise to analysts was the pigs saved per litter number. That number generally has been trending upward for the past several years.

While the average pigs saved per litter for the March-May period was 11.56, higher than the 11.36 for the same time last year, the number was lower than pre-report estimates.

“Analysts through it would go up by 2.3, I thought it would be that just a little bit and it only went up by 1.7%, so a little bit of slowing in the productive efficiency rate,” Meyer said.

That could bring some Christmas cheer for pork producers.

“The pigs per litter number, which had been 3% to 4% higher than the year before in recent quarters, was only up 1.7%. The positive news for us is once we turn around the end of this year and into next year, we will start to see this extra hog supply start to go a little lower,” said Rich Nelson, chief strategist for McHenry, Illinois-based Allendale Inc.

Nelson said that the combination of lower pig per litter numbers along with lower breeding herd numbers could be a turning point for the industry.

“We have actually been liquidating this herd for four years in a row. From four years ago, we’ve dropped 6.5% off the sown herd. We should be seeing some lower pork supplies,” he said.

“But the issue is that much of it had been offset by, over the past four years, we’ve added 5% to those pigs per litter numbers. Maybe now we are at the transition.

“Up until this point, we really haven’t seen that saving grade in lower hog numbers. Maybe by the turn of the year, that will change.”

Exports continue to be the lifeline for the U.S. pork industry.

In April, U.S. pork exports hit the highest volume and record in almost three years, since May 2021, according to USDA and U.S. Meat Export Federation data.

In April, U.S. pork exports totaled 277,910 metric tons. That was up 14% from a year ago and was the fifth largest volume on record.

The export value was $778.8 million, the third highest value on record, according to USMEF.

From the start of 2024 through April, U.S. pork exports increased 8%, to 1.04 million metric tons, and valued at $2.89 billion.

“USDA believes we are going to run pork exports this year 8% over last year. While it is true that four of the past five weeks have seen some good export numbers, we still have a little work to do,” Nelson said.

Meyer said that while domestic demand hasn’t been bad, it is lagging behind the big domestic demand numbers seen in 2020 and 2021.

“We had a pretty good month in April, above last year, and I think we’re going to run above last year for the next three or four months because last year was pretty bad,” he said.

“We had a pretty slow three or four months on domestic demand. We are still down 3.8% for the year, but we are bouncing around that five-year average.

“I can’t say that demand has been bad — it just hasn’t been as good as we were accustomed to for a couple of years and that has been somewhat of a drag on prices.”

The breakeven story remains a good news/bad news story. While lower corn and soybean meal prices have largely been responsible for a drop in production costs, losses in the industry continue.

“At one point last year, breakevens were running $104 on a lean basis. We’ve been running pork production losses since November 2022. With lower feed costs, we’re now seeing breakevens around $96 or so,” Nelson said.

“The negative side of this story is that we’re still not clearing. Recent hog prices are $90, so our issue right there is we’re not yet fixed on this whole discussion of profitability.”

The market hog weight categories as of June 1:

• Under 50 pounds — 21.589 million, up from 21.284 million a year ago.

• 50 to 119 pounds — 19.21 million, up from 18.98 million a year ago.

• 120 to 179 pounds — 14.63 million, up from 14.34 million a year ago.

• 180 pounds and over — 13.05 million, up from 12.74 million a year ago.