Latest USDA ‘Hogs and Pigs’ Report Points to Limited Supply Growth

Latest USDA 'Hogs and Pigs' Report Points to Limited Supply Growth

On this page:

• Full Report
• Key Takeaways
• Supply Implications for Spring and Summer
• Cold Storage Update
• Price Chart
• Forecasts
• Downloads

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Full Report

Key Takeaways

• The latest USDA Quarterly Hogs and Pigs report was clearly bullish, with key figures coming in below pre-report expectations. While revisions to the Jun-Aug pig crop were anticipated, they were smaller than expected. More importantly, USDA revised the breeding herd lower and reported a decline in sows from December to March.

• Near term hog supply has been running above expectations, but projections for the rest of the spring and summer suggest slaughter will be roughly in line with last year. The lower breeding herd was the most bullish element, tightening the supply outlook for the second half of the year. Prior to the report, fall slaughter was expected to increase by as much as 2%, but it now appears it could be flat or even lower year-over-year.

• Productivity metrics, particularly pigs per litter, appeared strong but may overstate actual performance. Disease-related losses are reflected in a lower farrowing rate rather than pigs per litter, which can mechanically inflate the metric. As a result, reported productivity gains should be viewed with caution.

Supply Implications for Spring and Summer

The distribution of hogs by weight categories provides a useful framework for assessing supply from March through August. Starting with the heaviest category, hogs over 180 pounds are estimated to be up about 2% y/y. These animals have largely already come to market or will do so in early April. USDA adjusts this category based on actual slaughter data, and indeed, March slaughter has been running about 2% above last year. Easter will likely disrupt slaughter patterns in early April.

Hogs in the 120-179 pound category show only a slight y/y increase and are expected to come to market from mid-April through the third week of May. During this period last year, weekly slaughter averaged around 2.41 million head, and current projections suggest a similar pace this year. This represents a notable slowdown compared to recent weekly slaughter levels, which have been running above 2.5 million head.

The 50-119 pound category also shows only a modest increase compared to a year ago, which is a departure from earlier expectations for a more significant expansion. This reflects a smaller-than-expected winter pig crop. Last year, weekly slaughter in June averaged about 2.36 million head, and current projections suggest a similarly constrained supply this year.

Finally, hogs under 50 pounds, which correspond to marketings in late July through August, are also only slightly higher y/y. This implies weekly slaughter near 2.35 million head in late July and early August, rising modestly to just over 2.4 million head later in August. The Dec-Feb pig crop feeds directly into this supply window, and here too, expectations have been tempered.

Analysts had generally anticipated a roughly 2% increase in the Dec-Feb pig crop, largely based on farrowing intentions reported in December. Instead, USDA reported farrowings down 1.5%, reflecting both the smaller breeding herd and likely productivity challenges. Disease pressures likely contributed to more failed pregnancies, reducing realized farrowings.

This smaller pig crop aligns with anecdotal reports of tight weaner pig supplies and elevated weaner prices during January and February. Notably, the ratio of farrowings to the breeding herd was essentially unchanged from the previous year. Many analysts had expected an improvement in this rate, which did not materialize. In fact, the farrowing rate has trended lower in recent years, potentially indicating persistent disease-related impacts. This trend should remain a key variable when evaluating future supply expectations.

Cold Storage Update

Total pork in cold storage at the end of February was 403.5 million pounds, 4.7% lower than a year ago and 13.1% below the five year average. This is the lowest end of February cold storage supply in 25+ years. Belly inventories remain supportive for prices heading into the spring. Stocks were 44.9 million pounds, 7.6% lower than a year ago. Inventories increased 4.5% from the previous month, half of the long run average build of around 9%.

This was the lowest February belly inventory since 2021. Ham inventory at 83.9 million pounds was about unchanged from last year. Inventories increased 4.2% m/m, below the typical build of around 10%. Loin inventory declined 1.9% from the previous month and was down 7.8% from last year and 26.6% below the five-year average. A robust sales pace has limited the accumulation of production in cold storage. Rib inventories usually increase around 5% in February, but this year the build was near zero, leaving supply about 16% below the five-year average. Pork trim inventory at 43.5 million was down 8% y/y and supply is expected to drift lower in Q2.

Price Chart

Forecasts