My takeaway from the latest report and economic outlook is that a smaller herd does not automatically mean an easier road for producers. There is still pressure on the margin between what it costs to raise a pig and what that pig brings at market. That deserves our attention as we look toward next year.
USDA estimates the September hog inventory at 74.3 million head, down 2% from a year ago. The breeding herd is also smaller. At the same time, producers continue to improve productivity: pigs saved per litter increased, although that gain did not fully offset fewer summer farrowings. These are USDA’s published estimates and may be revised.
That combination is worth watching. Herd size tells us something about future supply. So do the pigs saved, the pigs that reach market and the weights at which they are sold. We need to look at those pieces together to understand how much pork will ultimately be available.
And we need to keep costs in the same conversation.
In the economic outlook presented by Lee Schulz of EA Risk, projections using Iowa State University’s livestock returns model suggest tighter margins ahead. The September outlook put modeled annual farrow-to-finish returns near break-even this year, with losses projected next year.
Those projections reflect a particular set of assumptions about prices, costs and performance. They are not a forecast of what every producer will earn. Their value is in prompting a closer look at the assumptions behind each operation’s plan. The Iowa State estimated returns resource provides context for that benchmark.
For me, that brings the discussion back to a practical question: How much room does the business have if conditions change?
A better feed bill helps, but labor, repairs, facilities and financing still have to be covered. A budget also needs to account for the cash required to keep the operation running and meet debt payments. For contract growers, the questions may center more on placements, downtime, contract payments and the expenses they are responsible for carrying.
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