USA: Processor margins pressured by high hog prices

Published Dec 21, 2022

Tridge summary

The USDA's "Livestock, Dairy, and Poultry Outlook" report by Mildred Haley reveals that while November saw a seasonal increase in hog slaughter numbers, Q4 numbers are expected to decrease, mirroring the 1% decrease in the spring pig crop reported in the USDA's September "Quarterly Hogs and Pigs" report. This resulted in a 2% decrease in federally inspected (FI) hog slaughter in November, with processors paying higher prices for fewer heads. Estimated FI pork production in November was lower due to fewer hogs and slower growth in dressed weights, amidst challenges like high feed costs and disease. Despite lower supplies and similar demand factors, the gross processors’ spread, which is the difference between hog prices and wholesale values, has decreased due to a 16.9% year-over-year increase in hog prices not being sufficiently offset by a 2.73% increase in wholesale values.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

Hog slaughter numbers were seasonally higher in November, but Q4 federally inspected (FI) hog slaughter numbers are likely to finish out the year lower than a year earlier, in line with information reported in USDA’s September “Quarterly Hogs and Pigs” report, noted USDA economist Mildred Haley in the latest “Livestock, Dairy, and Poultry Outlook” report. According to Haley, the September report indicated that the spring pig crop—from which November slaughter hogs would be drawn—was down 1% from a year earlier. Estimated November FI hog slaughter totaled 10.9 million head, almost 2% lower than November 2021. Processors paid higher prices for fewer head slaughtered in November, with the average live equivalent price of 51-52% lean hogs at $63.72/cwt., almost 17% higher than average prices in November 2021. Haley noted that estimated FI pork production in November—about 2.3 billion pounds—reflects both fewer hogs slaughtered and slower growth in dressed weights. Further, she said ...

Source: NationalHogFarmer