Hog slaughter continues to run well below a year ago as a function of labor issues in processing plants, but also tighter hog numbers. Economist Steve Meyer with Partners for Production Agriculture doesn’t anticipate a repeat of 2020 but he is concerned about the impact COVID and labor shortages are having on slaughter capacity.
The tighter numbers have been forecasted in the USDA Hogs and Pigs reports but most of the price premium is still built into the deferred hog futures, while the nearby contracts struggle. Meyer doesn’t think that will change in the near term to pull up cash hog prices.
Meyer says the slowdown in expansion in the U.S. hog herd has come despite some near to record profits for pork producers in 2021.
He says cost of production will be up substantially for 2022. He projects a $80 per hog breakeven for the lowest cost producers and $85 to $87 for average producers and that doesn’t include higher costs for energy and labor.
