Decrease in US Hog Herd Could Support Prices in Coming Months

The US hog herd has been shrinking, and that could help support beleaguered pork prices in the coming months. 

The coronavirus pandemic has dragged down US pork demand and prices since the spring of 2020. In addition, high feed costs, a consequence of soaring corn and soybean prices, have made hog producers reluctant to expand their herds as margins narrow. 

As a result, the US inventory of market hogs, at 71.2 million head, was down 0.7% on Dec. 1 from a year earlier, and was 1.2% lower than on Sept. 1. Importantly, the number of hogs weighing less than 180 pounds—which are the hogs that will be arriving at processing plants from February to July 2021—was down 1.2% from a year earlier. Any further tightening of the US pork supply could bring a bit of optimism to what has been a depressed market. 

Breeding inventory, at 6.28 million head, also was lower on Dec. 1, down 3.0% from a year earlier. The breeding herd decline is the largest year-over-year drop since the 2008 financial crisis pummeled pork demand over a decade ago. 

The only hog category to show an annual increase in the latest period is animals 180 pounds and above, which rose 1.2% year over year. The increase indicates that the pandemic-related decline in pork demand has backed up hog supplies, with producers holding onto animals longer to avoid selling at weak prices. Total inventory of all hogs and pigs on Dec. 1, which includes market hogs and breeding hogs, was 77.5 million head, down 1.2% from a year earlier and down 0.9% from Sept. 1. 

With reduced supply of hogs as 2021 progresses, it is important to monitor the export market for any signs of a slowing in recent strong demand. In 2020, the US exported 2.72 million tonnes of pork through November, or about 13.7% more than a year earlier, largely due to shipments to China and Hong Kong. These shipments, along with strong exports to Canada and Mexico, will continue to be important export markets for US pork. Weekly USDA data available through December appear to support continued strong pork exports.

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