US Hog Farmers Face Financial Strain Amid Sluggish Market Conditions
August 19, 2023Hog prices in the US have declined considerably, leaving pig farmers under financial strain. As of August 17, lean hog prices averaged at $79 per hundredweight for October and $72 for December, far below the breakeven point which is in the mid-$90s. Toni Dunker from Advance Trading highlights the current challenges faced by hog farmers, stating, “We’re still feeding expensive corn. The breakeven is still well above where the market is trading.”
One of the major issues hog producers are grappling with is the softening domestic demand for pork. Despite US pork exports rising 14% in the first half of the year compared to last, China’s hog supplies, rebounding after the African swine fever outbreak, might slow the growth of future exports.
To navigate these challenges, some farmers have canceled their expansion plans, with others even considering early retirement. On a larger scale, Smithfield, the world’s largest pork processor, has announced its decision to shut down 35 hog farms in Missouri.
Dunker emphasizes the need for a reduction in corn prices to meet the breakeven point but cautions against a substantial drop which could hamper the hog industry’s growth. Similarly, the poultry industry is also facing its set of challenges, with Tyson Foods revealing plans to shut down four poultry processing plants due to losses.
The future of the hog industry remains uncertain, with more insights expected following the release of USDA’s next hogs and pigs report in September.
