According to recent data from the US Department of Agriculture (USDA), the US pork industry has seen a modest increase in its hog and pig inventory, although this does not necessarily indicate a return to profitability or an intention to ramp up production.
Inventory Levels and Market Expectations
As of 1 September 2023, the all hog and pig inventory stood at 74,319,000 head, a 2.2% increase from June and a marginal 0.3% rise from the previous year.
The market hog inventory was estimated at 68,241,000 head, up by 0.4% year-on-year. These figures came as a mild surprise to the industry, which had expected a decrease in inventory levels based on trade expectations.
Producers’ Intentions and Farrowing Rates
The USDA reports indicate a mixed picture concerning producers’ intentions for hog production. The breeding hog inventory has declined by 1% from both last year and the previous quarter. Farrowing intentions for the coming months also show a downward trend, suggesting that producers are not in a hurry to rebuild hog herds.
Record-High Pigs Per Litter
Offsetting the lower farrowing numbers are record-high pigs per litter. The June-August quarter saw an increase of 4.3% from the previous year, standing at 11.61. This marks the fourth consecutive quarter of record-high figures for pigs per litter, even as farrowing intentions have generally been below year-earlier levels.
Production Forecasts and Market Dynamics
The USDA has revised its 2023 pork production forecast slightly downwards due to expected lower slaughter numbers and lighter carcass weights.
However, full-year production is still expected to be up by 0.6% from 2022. On the trade front, the USDA has increased its forecast for pork imports while reducing its export forecast, citing weaker global demand.
Economic Indicators and Price Trends
Lean hog prices in August were down 16.5% from a year earlier, and wholesale carcass cutout values were down 9.5%. Processor margins have widened, but these fundamentals do not encourage producers to expand production.
Jason Franken from the School of Agriculture at Western Illinois University noted that unless the current gains in pigs per litter persist to offset intended cuts to farrowings, higher prices may not be realised.
