Summary of Key Points from the Conference Call Transcript Industry Overview - **Industry**: US Hog and Pork Industry - **Key Focus**: Analysis of farrow-to-finish operations and hog prices in the US market Core Insights and Arguments 1. **Profitability Trends**: - The US farrow-to-finish sector experienced a profitable Q425 with an operating profit of approximately US$10/head on average over the past decade. - After facing losses exceeding US$20/head in Q422-Q124 due to rising feed prices, the sector rebounded with profits of US$21/head on average in Q224-Q325, driven by lower feed costs and higher hog prices. - Specific profits reported: US$11/head in Q125, US$27/head in Q225, US$51/head in Q325, and continued profits of US$34/head in Oct 2025 (+263% YoY) and US$16/head in Nov 2025 (+9% YoY) despite seasonal weaknesses [2][6][27]. 2. **Hog Price Outlook**: - In 2025, live equivalent lean hog prices averaged around US$69/cwt (+8% YoY), with quarterly averages of US$64/cwt (+10% YoY), US$70/cwt (+4% YoY), US$77/cwt (+17% YoY), and US$64/cwt (+2% YoY) in Q425. - The USDA forecasts a slight decrease in average hog prices to US$67/cwt (-3% YoY) in 2026, with quarterly expectations of US$64/cwt (+1% YoY), US$70/cwt (+0% YoY), and US$71/cwt (-8% YoY) [3][11]. 3. **Feed Costs Analysis**: - Feed costs, which constitute about 60% of total costs for farrow-to-finish operations (26% corn, 11% soybean meal), saw a significant decline contributing to improved hog farming returns in 2024-25. - Feed costs decreased by -13%/-8%/-7% YoY in Q1/Q2/Q3 2025 and -5% YoY in Oct-Nov 2025. However, prices for corn and soybean meal have stabilized after bottoming out in late 2024, with expectations of less cost relief for hog farming in 2026 [4][18]. Additional Important Insights 1. **Market Dynamics**: - The turnaround in hog farming returns is attributed to lower feed costs and higher hog prices, indicating a recovery phase post the adverse impacts of the Russia-Ukraine war on feed prices [2][6]. 2. **Risks Identified**: - Key risks for the sector include price volatility of agricultural commodities, disease outbreaks, food safety regulations, and increased environmental protection costs due to stricter government regulations [27]. 3. **Future Projections**: - The expectation of marginally higher supply in 2026 is likely to exert downward pressure on hog prices, indicating a cautious outlook for the upcoming year [3][11]. This summary encapsulates the essential findings and projections regarding the US hog and pork industry, highlighting profitability trends, price forecasts, and associated risks.