Hog Prices Are Slightly Better in 2024

DES MOINES (DTN) -- Pork producers are expected to have a better year in 2024, but stresses such as fewer shackle spaces due to plant closures will prevent profits from being positive.

Steve Meyer, lead economist for Ever.Ag, told attendees at the 2024 World Pork Expo here on Wednesday that while 2023 was the worst year in history for pork production with a $27.71 per head average loss, 2024 isn't great either. But with only a $2.23-per-head loss, it does seem better, he said.

"Last year was the worst in history," Meyer said. "Even worse than 1998. But we know producers were far more active in managing risk last year than they had been in the past. (With) the availability of LRP (Livestock Risk Management) and LGM (Livestock Gross Margin) insurance, the increased knowledge level of using futures and options, I don't think the actual losses would add up to $27.71, but they were still bad."

Missouri pork producer Scott Hays told DTN that 2023 was a tough year, but he said he and his family made some changes prior to that to be sounder for a dip in markets and to allow the sixth generation to take over the operation.

Hays said his family manages pigs for themselves and others, while also owning and operating a sow farm.

"We sell weaned pigs primarily, but we do finish a few pigs as well," Hays said. "Up until we made the changes, we were a more traditional farrow-to-finish operation. We are glad we made the changes we did," he added.

2023 WAS CHALLENGING FOR HOG FARMERS

Last year was a very challenging year for many pork producers. A reduction in sow numbers put pressure on the markets, while those were taking up shackle space typically used for market hogs. Meyer said even with cutting back on the breeding herd, production numbers have continued to stay at 100% due to more pigs being saved per litter, which is at an all-time high of 11.53.

"We continue to see an increase in production per sow, and now with the new PRRS (porcine reproductive and respiratory syndrome) strain and labor issues back to a manageable spot, we expect an increase in supplies," Meyer added.

Meyer said he is also concerned about the possibility of a negative impact on prices due to the decrease in shackle space at the end of June with the loss of the Perry, Iowa, Tyson plant. Another impact is heavier weights, which Meyer said he doesn't have an explanation for other than a decrease in feed costs.

"We get to the time of year when we think we should be going into our best market, and we see a little pullback. When we are trying to recover from last year, it makes you nervous and hard to just shrug that off," Hays said.

MANY FACTORS ARE INVOLVED IN PRICES

Joe Kerns, president of Ever.Ag, said the price of corn seems to be coming down, but likely will meet a threshold and stop falling. A pork producer with soybeans in the ground may want to find somewhere to store them at harvest, he said.

"The U.S. is raising record crops in both corn and soybeans," Kerns said. "Prices will respond to the increase in production."

Kerns also pointed out the change worldwide in grain production numbers, with Brazil on top and pulling in front of the U.S. as well as taking a lot more of the market.

As the U.S. loses some of the grain market worldwide, pork exports continue to see an increase of nearly 9% in 2024, which should help support prices some. Feed costs may go down slightly but are not likely enough to increase prices considerably. Still, the average cost per hundredweight (cwt) carcass for 2024 is $86.59 versus $97.31 in 2023.

Meyer said the export market has been strong but has changed with Mexico now being the No. 1 importer of U.S. pork, above Japan and South Korea. China is not looking to import more U.S. pork, as they have increased their production after disease pressure the past few years.

"It was a very challenging year last year to say the least," Hays said. "It's one of those periods that changes the look of the industry. I've been in this business for 35 years, and unfortunately, it's the third time something like this has happened. When you come out the backside and start making a little money, you look at what you had to do to recover and what improvements you have to make."

After seeing 2023 finish out at an average cost on the national negotiated net weighted average of $83.50 per cwt, 2024 had a first quarter average of $77.99 per cwt. Meyer's expectations for the remainder of the year are a $91- to $94-per-cwt price in the second quarter, $88 to $92 per cwt in the third quarter and $74 to $78 per cwt in the fourth quarter. This would end 2024 at an average of $83 to $85 per cwt.

"We need to be in the low to mid $80s for pork producers to see break even," Meyer said. "We will have to continue to see strong exports and keep foreign animal diseases out to keep our markets positive."

Jennifer Carrico can be reached at jennifer.carrico@dtn.com

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