Analysts: Demand Will Offset Large Hog Supply

The inventory of U.S. hogs and pigs on September 1 was 79.1 million head. That’s up one percent from one year ago and down one percent from June. The breeding herd inventory, at 6.3 million head, was down one-and-a-half percent from last year and up slightly from the previous quarter. The market hog inventory, at 72.8 million head, was up one percent from last year, but down one percent from June. The number of market hogs in the two heaviest weight categories are up significantly from one year ago. Procurement Strategies President Kevin Bost is optimistic demand will still offset the large supply.

“On a per capita basis this year we think that pork supplies actually will be down in spite of the fact that we’ll have record pork production. And the reason is exports. Exports this year, at this point in time we’re, expecting to be about 27 percent of all the pork produced in the United States will leave the U.S. shores. And that that compares with about 23 percent a year ago. So, big increase in export business, cleaning up the supply. And if we don’t get overwhelmed with these 180 pound and up hogs, if we’re able to move those, continue to be forward until we start to see some of the hole after December, we expect a little higher prices in the meantime.”

Bost says the rules of the game have been changed temporarily by the pandemic. The hogs supply is apparently larger than the practical slaughter capacity.

That’s what we’re looking at here, we’re looking at a kill rate of hog slaughter that is constrained by the kill capacity, and not by the hog supply, which means you’re not going to do 2,000,007 a week, week after week for any length of time this fall. And if the exports are nearly as good as I think they are then the net domestic pork supplies are going to be down, eight to nine percent from a year ago despite these larger hog inventories.”

Steiner Group Consulting President Len Steiner expects to see higher hog prices in the fourth quarter, which is an unusual situation.

Most years you’ll find the fourth quarter is cheaper than the third quarter. And this year we got them up about $11 a hundred weight. We’re guessing that the third quarter is going to come in about $55.27 for the CME index on average, and we’ve got the fourth quarter at $66.67 up a little over 11 bucks. For the year we’ve got prices in 2021 about almost $11 higher. This year it should be averaged about $59.04 for the CME index. Next year we got it plugged in right now at $69.83, with first quarter at $68.67, second quarter $75.67, third quarter $73.33, And then the fourth quarter of next year following the seasonal pattern down to $61.67.”

Steiner describes the fourth quarter as an “oddball” situation, but it should benefit the producer.

The Pork Checkoff hosts the media briefing with reporters to provide timely information on supplies, and the views expressed are those of the panelists.

For more information, producers can go to Pork.org or call 800-456-PORK.