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Hog market tune is a dirgeHog market tune is a dirge

Hog Outlook: Costs, demand and supply drive the current and future industry picture.

Kevin Schulz

November 13, 2023

3 Min Read
Pigs on mat in pen
DARK CLOUDS: Hog producers who remember 1998-99 and 2008-09 may sense déjà vu with the current market situation.Kevin Schulz

Steve Meyer can sing, and he can belt out a sweet tune. Sadly, the tune he is currently singing is not so sweet when it comes to the hog market outlook.

Hog producers with some history in the industry remember 1998 as a bad year, but Meyer says the current situation is worse than that, “and that was a bloodbath,” he told attendees of the November Swine Day at South Dakota State University.

Meyer is the chief livestock economist with Partners for Production Ag.

For the two years of 1998-99, producers lost just over $22 per head, and Meyer estimates the losses for 2023-24 to come in at almost $26 per head.

Meyer says one or more of three things need to occur to turn that around: Costs must fall, demand must improve and supply must decrease.

Historically speaking, current hog prices are “good”; costs, on the other hand, are not. It is estimated that the average producer will pay $6 to $8 per cwt more in costs, with profits coming in $10 to $12 per head lower.

With demand an important component, Meyer says exports are helping some.

Destination: Mexico

The latest USDA data, as compiled by the U.S. Meat Export Federation, show that September exports of U.S. pork maintained a robust pace, though off slightly from a year ago.

According to the USMEF release on Nov. 8, pork exports totaled 221,140 metric tons in September, down less than 1% from a year ago, while export value fell 4% to $643.7 million. September export value to Mexico increased 18% year-over-year to $207.6 million, the third-highest month on record. Exports also increased strongly to Central America and Australia and trended higher to the Caribbean, Taiwan, New Zealand, Vietnam and Malaysia.

It has always been said that capturing any of the Chinese market pays big dividends for any product — even if it’s a small incremental growth — because a mere 2% market share growth into a population of 1.4 billion is still a big number. Notice that China is not even mentioned in that previous paragraph.

For the first three quarters of 2023, pork exports increased 9% year-over-year to 2.13 million mt and climbed 7% in value to just under $6 billion, led by record-large shipments to leading market Mexico, according to the USMEF.

As Meyer says, “Mexico is where it’s at.”

Current political tensions and a 25% punitive tariff on U.S. pork going into China are two roadblocks for getting more of our product on Chinese plates. But if and/or when China’s pork imports do rebound, someone will be selling pork to that large market. That should open marketing doors for U.S. exports to other markets.

The last point on Meyer’s list of what needs to happen to right the pork ship — supply must decrease —may already be in motion. In previous pork market downturns, in 1998 as well as 2008-09, there was an exodus of producers that maybe had already been struggling: weeding out the weak, if you will.

An exodus may occur again, as some producers may just throw their arms up if they don’t see a good future. Their situation may be expedited if the producer is nearing retirement and there is no one to turn the farm over to, or if their facilities need upgrades, especially if they are not Prop 12-compliant.

If producers do close their facilities, will those facilities sit empty, or will another operator add those facilities to their enterprise? As painful as it might be, I say they should sit empty.

That may not necessarily help lessen the supply, especially when you remember that I wrote in my last Hog Outlook column that hog producers hit a record of 11.61 weaned pigs per litter.

Quite a few notes must align to change the pork market dirge into something like “Happy Days Are Here Again.”

Schulz, editor of sister publication The Farmer, grew up on the family hog farm in southern Minnesota, before a career in ag journalism, including National Hog Farmer.

About the Author(s)

Kevin Schulz

Editor, The Farmer

Kevin Schulz joined The Farmer as editor in January of 2023, after spending two years as senior staff writer for Dakota Farmer and Nebraska Farmer magazines. Prior to joining these two magazines, he spent six years in a similar capacity with National Hog Farmer. Prior to joining National Hog Farmer, Schulz spent a long career as the editor of The Land magazine, an agricultural-rural life publication based in Mankato, Minn.

During his tenure at The Land, the publication grew from covering 55 Minnesota counties to encompassing the entire state, as well as 30 counties in northern Iowa. Covering all facets of Minnesota and Iowa agriculture, Schulz was able to stay close to his roots as a southern Minnesota farm boy raised on a corn, soybean and hog finishing farm.

One particular area where he stayed close to his roots is working with the FFA organization.

Covering the FFA programs stayed near and dear to his heart, and he has been recognized for such coverage over the years. He has received the Minnesota FFA Communicator of the Year award, was honored with the Minnesota Honorary FFA Degree in 2014 and inducted into the Minnesota FFA Hall of Fame in 2018.

Schulz attended South Dakota State University, majoring in agricultural journalism. He was also a member of Alpha Gamma Rho fraternity and now belongs to its alumni organization.

His family continues to live on a southern Minnesota farm near where he grew up. He and his wife, Carol, have raised two daughters: Kristi, a 2014 University of Minnesota graduate who is married to Eric Van Otterloo and teaches at Mankato (Minn.) East High School, and Haley, a 2018 graduate of University of Wisconsin-River Falls. She is married to John Peake and teaches in Hayward, Wis. 

When not covering the agriculture industry on behalf of The Farmer's readers, Schulz enjoys spending time traveling with family, making it a quest to reach all 50 states — 47 so far — and three countries. He also enjoys reading, music, photography, playing basketball, and enjoying nature and campfires with friends and family.

[email protected]

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