37 The Trusted Source for Canada’s Pork Producers Better Pork | February 2024 LOOKING AT HOG FUTURES FOR 2024 Better hog health, more demand, & lower interest rates inspire optimism. By Moe Agostino & Abhinesh Gopal Moe’s Market Minute North American hog producers live and die by the gyrations in hog futures. 2023 was not the kindest to hog futures and to hog producer margins. Futures reacted sharply to the developments in the United States (U.S.) hog/pork sector. The trend in 2023 had been that of a shrinking breeding herd. The U.S. Department for Agriculture (USDA) has been reporting on a shrinking U.S. hog breeding herd that could break below the industry’s comfort level of six million head for the first time in a long time. Canada’s hog herd as a whole is expected to shrink in 2024 on account of reduced Canadian packing capacity that shrunk in 2023 due to plant closures and continued labour availability issues. Their issues are likely to continue in 2024. U.S. domestic hog and pork demand was a sore spot in 2023 and that too is contributing to the Canadian and U.S. hog herd shrinkage. Domestic demand continued to be the missing link in 2023 when exports did a lot of the heavy lifting, especially with Mexico buying record amounts, as domestic consumers preferred spending more on beef despite record high prices. We spoke previously about the surprise in the September USDA ‘Hogs & Pigs’ report update in terms of higher-than-expected U.S. hog inventory. This was on account of increased productivity, especially due to better mitigation of diseases from the hog herd. With a much healthier herd, as the big integrators reduce old sows from production, you have a recipe for more supplies at lower prices that results in losses for hog producers despite lower feed prices. The very big hog integrators control two-thirds of the total sows in the U.S. So, when they lose on the hog production side, they make it up on the packer side. That is causing losses to continue as they are reducing less productive sows and replacing them with more productive ones. Better health has surely been a key driver. The increase in productivity gains (pigs saved per litter), feed efficiencies and less disease had offset the continuous labour challenges of 2021 and 2022. This put U.S. producers back on their long-term growth trend for litter size, and that trend should continue in 2024. The average U.S. pig litter size from September 2007 to September 2023 grew at an annual growth rate of over 1.5 per cent. Also, the continuous increase of the U.S. pig crop despite farrowings remaining relatively stable over the last 28 years reflects the productivity increases in the industry. The quarterly USDA ‘Hogs and Pigs’ reports always garner keen market attention, but since the latter half of 2023, it has been watched more closely for more surprises. Productivity gains put U.S. producers on long-term growth trends for litter size. Jodie Aldred photo
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