For 2014 to date, producer’s decisions to raise hogs to higher weights have been incentivized by very strong hog prices due to lower animal numbers, accommodated by lower feed costs and excess barn space created in the hog supply chain by Porcine Epidemic Diarrhea (PEDv). This year, estimated commercial hog slaughter is likely to be about 5 percent below slaughter in 2013, while commercial pork production is expected to fall only about 2 percent. Dressed weights this year are likely to average 8 pounds heavier than last year and 9 pounds more than in 2012.
Second-half hog prices will likely continue to reflect year-over-year reduced hog supplies—due to PEDv—and increased demand for hogs. Third-quarter prices of live equivalent 51-52 percent lean hogs are expected to average $85-$87 per cwt, almost 22 percent above a year ago. For the fourth quarter, prices will likely average $77-$81 per cwt, about 29 percent above a year ago.
The current demand for hogs derives from strong demand for pork products, both domestically and in export markets. The U.S. demand for pork is being driven, in part, by high prices of substitute animal proteins, that is, of beef and chicken. Record-high beef prices, in particular, are likely causing consumers to buy more pork products. Strong retail beef prices, projected to be at record levels in 2015, will more than likely continue to drive demand for pork.