Robust Pork Demand Underpins Pork Prices in The Near Term

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USDA estimated hog slaughter last week at 2.722 million head, 6.3% higher than a year ago and the highest weekly slaughter since Dec. 2020. Over the last six weeks, hog slaughter was 15.450 million head, 194k head (+1.3%) higher than a year ago. This is well above the inventory count presented in September,  which pegged 50-179 lb. hogs down 414k head (-1.2%) vs. a year ago.

What is even more impressive is that these high slaughter numbers have been achieved despite the closure of the Tyson Perry plant in June of 2024. That plant had a capacity of around 45,000 head per week. The question for market participants is whether the recent increase in slaughter reflects another inventory miscount, there have been plenty in recent years, or whether producers have fallen behind in their marketings. It is probably a combination of both, with heavy weights suggesting producers are feeding hogs longer due to lower feed costs and profitable hedges.

For much of November, the larger than expected slaughter numbers were viewed as particularly negative. Funds that had carried large net long positions for much of the summer and early fall rushed to cut exposure. The price of 23-27# hams was expected to hold in the mid $90s through November but instead dropped to as low as $84/cwt. With holiday demand typically pulling back in December and slaughter running large, fears grew that hams could drop below $80/cwt.

Instead, ham prices have turned sharply higher and closed above $107/cwt on Friday. The rally is similar to what we saw at this time last year. The question is why. Slaughter is at the highest point in five years, weights are up, and yet ham prices have rallied nearly 30% in just three weeks. We believe some of this reflects robust export sales. Low prices in the second half of November likely encouraged packers and exporters to put more orders on the books. Holidays have also contributed to increased volatility. Domestic buyers may have looked at the lower prices in November, combined with expectations for large December slaughter, and opted to buy hand to mouth. Now it appears some are short and need to run full production ahead of the shortened holiday weeks.

We expect prices to ease lower from here, in part because export buyers are likely to back off at these price levels and processor demand will slow during Christmas and New Year’s. Similar to a year ago, expectations are for ham values to trend lower in Q1, with prices expected to average around $83/cwt in February and March. While that price may make sense relative to where February hog futures are currently trading, the risk remains skewed to the upside.

Weekly Export Blindspot to Disappear by Early 2026

According to USDA, it will continue to publish two weekly export reports per week until it is fully caught up with reporting by the end of the year. At this time USDA is reporting exports through mid November. This is still quite delayed but at least we have started to get a better sense of the product flows.

According to the latest report, export sales in late October were followed by relatively light volumes the first two weeks of November. That slow start in November, especially in pork sales to Mexico likely set the stage for the decline in ham prices at the time. As noted earlier, ham values have surged higher in the last two weeks, which would suggest sales to Mexico have once again picked up. Different from beef, outstanding pork export sales are on a solid footing.  Outstanding pork export sales to Japan are currently 78% higher than this time last year while outstanding sales to Mexico are up 20% and Colombia is up 8% vs. this time last year.

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