If you ever find out what it is, let me know. Hugo had 2 of these not that long ago, they looked identical to that one, same place, except that Hugo had one either side of his naval. They went away after 24 hours and never caused him any trouble.
We had a super intense outbreak of Pigeon Fever here in Central Oregon two summers ago. It is a virus that absesses in the mammory glands and is very contageous and gross. Luckily has a very low mortality rate just a pain to deal with.
Cushings can also have symptoms of abdominal swelling although that picture looks like the swelling is more localized than that.
Your horse could most likely be having a reaction to biting flies/insect. "Swat" is an excellent treatment for this. Heals up the bites and protects it from more irritation, after washing the site of course.