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 remains constrained, and all indications are that slaughter in the next two weeks will remain well below year ago levels.
  • The demand picture is mixed. Processing items, especially bellies, have outperformed expectations. Fresh pork, particularly loins, have a softer undertone and are currently following the downward seasonal trend. Lower slaughter may put a floor under loin values although pricing is not expected to increase significantly until late December.
  • Loin prices are currently especially competitive relative to beef and chicken options.
  • Ham prices got a boost in October thanks to a rush of orders from Mexico. Some 100k mt were booked in a three week stretch. Since then, however, orders to Mexico have slowed down and ham prices have eased lower as well.
  • Pork supply in Q1 is expected to be under last year’s levels and, despite the recent decline in futures, pork prices are expected to be higher than a year ago.

Full Report

It is not uncommon for loin prices to be lower in November and December and that has been the case again this year. In the near term, retailers are likely focused on merchandising for the holidays, with hams, turkeys and rib roasts staples for Thanksgiving and Christmas celebrations. However, we think this is the time to start thinking about post-holiday needs and pork loins stand out as great value both vs. beef and chicken offerings. The charts to the right show the price ratio of boneless pork loins relative to 81CL coarse ground beef and b/s chicken breasts. We looked at the ratio for the last 15 years and highlighted what the ratio looked like in 2023 and so far in 2024. While year to year the ratio has moved around quite a bit, the point is that current levels are on the low end of the 15-year range.

Pork has been a competitive protein in recent years but especially recently. There is a lot of talk of consumers trading down or looking for value. The recent rally in hog futures may give the impression that pork prices are getting more expensive but that is not the case. Much of the recent rally in hog futures is due to the sudden (and likely temporary) shift in the value of pork bellies. Loin prices, however, have been trading in a very predictable fashion and currently are far more competitive vs. other proteins. Other fresh pork items, be this pork butts, baby back ribs and even picnics, present similar opportunities.

As noted above, the domestic pork market is expected to remain well-supplied through 2025, with only modest price appreciation.

Per Capita Pork Availability in 2025 (per USDA) and Wholesale Price Outlook

USDA raised its projections for beef supply in 2025 but it lowered its projections for pork production next year. This is more consistent with our figures although we remain less optimistic than USDA that pork supply will increase appreciably in 2025. Our opinion is that the decline in the breeding herd and productivity returning to a more normal trend implies lower hog supplies through the first half of the year and only a modest increase in the second half.

USDA’s current forecast is for pork production next year at 28.415 million pounds, 115 million pounds lower than the forecast presented in October but still about 1.9% more than a year ago. Pork exports are expected to be unchanged although uncertainty regarding trade with Mexico and China hangs in the background. USDA forecasts suggest per capita availability up 1% vs. a year ago, implying limited upside for wholesale pork prices unless there is a notable shift in demand, something that we have yet to see in the historical data (see chart).

Hog Slaughter Expectations Going into Thanksgiving

Thanksgiving is late this year so this will skew some of the year/year comparisons. This week should be a full production week but will it? Pork packer margins were in good shape until not long ago but have suddenly turned negative. The gross margins last week was down about $13/head (-23%) vs. two weeks ago. That’s largely a result of the $5/cwt decline in the value of the cutout but weak by product values do not help. LMIC is currently estimating the value of pork by-products at around $23/head, down $6 (-21%) compared to a year ago. So what will packers run this week and next? Saturday slaughter tends to be big in the fall as there are more hogs that need to be processed. But the incentive to run Saturday shifts fades quickly when margins get compressed. Currently, hogs scheduled for Saturday slaughter are down about 78k head vs. the week before. Saturday slaughter this week could easily be around 150-160k head, coincidentally similar to the pre-Thanksgiving week in 2022. If true, it could put hog slaughter this week at 2.59 million, the lowest in four weeks.

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.