April 27, 2023

US hog producers to see profit in Q2, Q3 before suffering losses in late 2023: Rabobank

Rabobank has recently published the report "North American Agribusiness Review April 2023" by senior data analyst Al Griffin.

According to the report, hog prices in the United States are down 20% year-on-year due to declining demand from packers in light of sufficient production and lowered pork consumption. Rabobank anticipates slaughter levels in the second quarter to be lower year-on-year and prices to firm. Producers are currently operating at a loss, but Rabobank predicts they will see profit in the second and third quarters before returning to losses in late 2023.

Pork prices are trending down together with weaker consumption. Cold storage inventories are up 9% compared to last year with a 42% increase in bellies. Rabobank expects that the lower pork prices should encourage pork consumption to stabilise over the approaching summer grilling season.

February pork and pork variety meat export volumes were up 11% from last year to 219,729 tonnes and export values were up 10%. Pork imports were 18% less in volume. Rabobank expects a 3% increase in exports in 2023 given the US has competitively low pork prices in the global market.

As for Mexico, hog prices are 15% below year-ago levels due to ample supply, weak demand from slaughterhouses and weak pork consumption. Rabobank said that steady imports of low-cost pork are also pressuring the market.

Despite some moderation in feed costs, most producers are operating at a loss. Rabobank expects production growth to slow given the current supply imbalance, although higher chicken prices may help stabilise prices.

- Rabobank