Steiner and Company produces the Profit Maximizer report on behalf of National Pork Board based on information we believe is accurate and reliable. However neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.

Highlights

  • Hog slaughter in the four weeks ending July 26 was 3.7% lower than a year ago, far lower than expectations based on the July hog survey. Additionally, USDA has revised lower some of its initial slaughter estimates.
  • In the near-term pork supplies remain limited, impacting primarily processing items as buyers need to run consistent production. Ham, trim and belly prices continue to be well supported.
  • Retail fresh pork sales have been slow despite record beef prices. Loin values are near year ago levels while pork butt and sparerib prices have started to seasonally decline and should see more downside price pressure as slaughter move higher in the fall.
  • Ham prices continue to trade very firm given the shortfall in production. Tariff uncertainty with Mexico has some buyers on the sidelines for the moment.

Full Report

When the June Hogs and Pigs report was released, it noted that the inventory of hogs over 180 pounds was 0.6% lower than a year ago and, at 12.941 million head, about 200,000 head higher than in 2023. The hogs included in that inventory count have already been processed.  Hog slaughter through July 12, which included the 180+ pound hogs and possibly a few lighter ones, totaled 13.6 million head, 370,000 head (-2.6%) lower than a year ago and about the same as in 2023.

The June survey also indicated that the inventory of hogs in the next weight category, 120–179 pounds, was 0.5% higher than a year ago and 6.4% higher than in 2023. In other words, hog slaughter was expected to begin trending higher in the second half of July and into the first half of August.  In the last two weeks, slaughter has averaged 2.33 million head/week, 2.9% lower than a year ago and slightly below 2023 levels.  Also worth noting is the fact that low as the initial weekly hog slaughter estimates have been, USDA has revised them down even more when actual data was tabulated. Since April, weekly hog slaughter has been revised lower by an average 7,000 head/week.

There is some speculation that part of the reason for the lower slaughter, not just for hogs but cattle as well, has to do with labor issues.  Fears of immigration raids have resulted in fewer workers showing up for their shifts. In some instances, such as the recent JBS plant, hundreds of workers that had legal status lost it overnight.  Filling those jobs may take time and it could be having an impact.

With that said, if slaughter was artificially lower due to labor issues we would see an uptick in hog weights, which has not been the case.  Producers remain current and that is helping support hog values.

Further adding to the tight spot supply is the limited supply of pork in cold storage.  The USDA survey results showed June inventories were the lowest since 2010, down 6.3% from the previous month and almost 20% lower than the five-year average.  Buyers caught short due to the shortfall in slaughter have had little choice but to pay up to secure supply, something that has been particularly evident for processing items.  Plants need to run production 5 or 6 days a week and have little choice but to pay up to cover needs.

Despite firm spot prices, futures have come under some pressure, we think in part due to uncertainty regarding trade.  With a quarter of US pork going to export, spec funds have opted to curtail some of their long exposure.  With plenty of trade deals up in the air, volatility is likely to persist.

Limited Supply of Pork in Cold Storage Persists

Pork supply remains tight, and this has continued to support prices, especially for processing items during the summer. Cold storage data for the end of June highlighted the extent of the supply constraints, with total pork inventory at 422.3 million pounds, down 11.1% from a year ago and nearly 20% below the five-year average. This marks the lowest June-ending inventory since 2010. While the month-over-month decline of 6.3% is in line with seasonal trends, the drawdown came from already low levels, further tightening spot availability and firming prices in June.

Belly inventories were particularly tight, falling to 44 million pounds at the end of June—28% lower than a year ago and 19% below the five-year average. The 16.7% monthly decline in bellies exceeded the typical seasonal drawdown and is expected to keep belly prices well supported in the short term. Ham inventories were also under pressure, totaling 110.9 million pounds, down 13.5% year-over-year and nearly 20% lower than the five-year average. While a slowdown in exports may have contributed to the lower ham stocks, the reduced inventory is a bullish indicator for ham values heading into Q3. Trim inventories followed seasonal patterns, down 6.3% from May and close to year-ago levels, but the broader supply tightness remains a defining feature of the current pork market.

Price Chart

Forecasts

Steiner Consulting Group produces the National Pork Board newsletter based on information we believe is accurate and reliable. However, neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.