Light at the end of the tunnel? Opportunity for pork producers in 2025

As we celebrate “Porktober” and all the benefits of pigs, pig farming and pork, it’s also exciting to see the opportunities shaping up for U.S. pig farmers in what could be a good 2025. There are many variables at play, but cutout values have remained remarkably strong through the first part of fall, with margins for most producers exceeding $10 per pig. The Hogs and Pigs report indicated an increase in pigs coming to market from late fall into early winter, yet there has been a comfortable balance of pigs available, aligning with packer demand. The 2024 feed cost environment, combined with underlying strength in the cutout, is presenting forward margins that are worth revisiting if you haven’t reviewed them recently. Is it possible we’re seeing light at the end of the tunnel?

The general sense of optimism from producers reminds me of the feeling I had in March. As you recall, Managed Money traders moved lean hogs to a record net long position earlier than usual ahead of the traditional summer price rally, only to see the markets fall short of our bullish early spring rally. While we hope the light at the end of the tunnel is a clear sky, we know it’s wise to take profit margin opportunities in a disciplined manner because that light could turn out to be a train.

Reflecting on recent client meetings, it’s clear there are no “average” producers. Some have been fortunate to avoid health challenges, while others have faced significant herd health adversity. Some were disciplined in their hedging activities, capturing improvements when possible. These producers have substantial hedging gains, improving their working capital and overall net worth. Others have struggled with tighter corn or soybean meal basis levels, resulting in higher production costs compared to peers.