It comes as no surprise that the futures market is predicting the usual seasonal pattern for hog prices over the coming year. The futures market indicates hog prices will trend higher until July then decline until the end of the year. The futures market is predicting higher hog prices in 2024 than in 2023; but futures are indicating hog prices will be lower in the first half of 2025 than in the first half of this year.
USDA is slightly less optimistic about 2024 prices. USDA’s February World Agricultural Supply and Demand Estimates said prices for 51-52% lean live hogs averaged $58.59/cwt last year and are forecasting an average of $60/cwt this year. That is higher, but not by much.
Hog prices usually move higher during the first quarter of the year. For seven of the las 10 years February hog prices have averaged above January’s and March prices were higher than in February. Live hog prices averaged under $50/cwt during both December and January. These months had the lowest hog prices since January 2021.
Higher hog prices are sorely needed. Calculations by the Economics Department at Iowa State University estimate the typical Iowa farrow-to-finish operation lost $34.86 for each hog sold during January 2024. That was the 13th month with red ink in the last 15 months. In the last decade hogs sold during November, December or January have had losses on average and the remaining nine months have been profitable on average.
Iowa State University estimated the average production cost for January 2024 marketings was $89.22/cwt of carcass weight. That is lower for the ninth consecutive month and the lowest cost since February of 2022. The decline in production cost has been driven by lower feed prices. Corn prices have been declining sharply over the past 12 months. The average farm price of corn in January was $2.50/bu lower than a year ago. Lower feed costs are likely to result in heavier slaughter weights.
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