Hog Market Analysis – 10/20/2022

USDA has projected a fractional year over year increase in US pork production in 2023 and a modest decline in net pork exports. The USDA’s current forecasts suggest a modest increase in the domestic per capita pork supply n 2023  which is a key variable in the April lean hog futures price equation.

The September survey suggested US hog producers have or plan to cut the  number of sows farrowing during the last half of 2022. The USDA’s forecast increase in pork production appears optimistic compared to the September Hogs & Pigs survey data. USDA analysts also expect a decline in pork exports in 2023. It is unlikely China will reenter the US pork market as was the case in 2021. But a downturn in US pork export trade will likely be the result of a shortage of US pork supply rather than a decline in foreign demand for US pork.

We have included an economic value table for April lean hogs based on domestic per capita pork supply. The forecast values are in 2023 prices assuming a 8% inflation rate. The USDA’s 52.4 pound forecast suggests a trading range of  $60 to $103 compared to the close on 10/20/2022 of $93. In the past 10 years April hogs have displayed an average autumn winter price range of $30.