Hogs and Pigs: Revisions, Bullish Inventories, and Bearish Farrowings

The Department of Agriculture, in the December Hogs and Pigs report, made downward revisions to past market hog inventories. When this is couple with the smallest breeding herd since early 2018 and the largest decline in the breeding herd since December 2014, it makes a for a much different market.

Jason Franken of Western Illinois University says pork producers have a bullish market in front of them because of the numbers.

“All except for the heaviest weight class of market hog inventories are down compared to the same time last year, which is bullish news.”

Bullish because it appears the market-ready supply of hogs is smaller than anticipated. Overall, Franken says, the number of hogs weighing less than 180 pounds is nearly 2.5 percent smaller than a year ago. Those are the hogs expected for processing from January to May.

“Taking all of this into account, there is the possibility of profitable hog prices, especially throughout the summer of 2021.”

In general, hog prices tend to be higher in the 2nd and 3rd quarters of any given year, with lower prices in the 1st and 4th quarters.

Franken says the projections assume the strong demand observed even in the face of the COVID-19 is maintained. However, if that is not the case or if hog supply turns out to be greater than anticipated, then lower prices may be realized.