US Swine Economics Report

US - On June 27 USDA will release the results of their latest survey of the U.S. swine inventory, reports Ron Plain in his Swine Economics Report.
calendar icon 23 June 2008
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My calculations indicate the breeding herd is 2.0% smaller than a year ago, but the market hog inventory is 6.2% larger, and the total herd is 5.4% bigger than on June 1, 2007.

USDA will make upward revisions in their previous estimates. Hog slaughter during March-May was 2% higher than expected based on the March inventory report. A 15% decrease in slaughter hog imports from Canada exacerbated the difference. Spring slaughter of U.S. raised hogs was 2.6% higher than the March report implied. The new circovirus vaccine is reducing death loss which may explain most of the increased slaughter.

In their last inventory report, USDA predicted March-May farrowings would be 0.5% larger than a year earlier and June–August farrowings would be down 2.5%. I think spring farrowings were actually up 2.5% and I believe summer farrowings will be only 1.0% smaller than last year. I’m forecasting fall farrowings to be down 3.0% compared to September-November 2007. Corn prices are astronomical causing hog producers to lose lots of money. Spring sow slaughter was 10% higher than a year ago.

I’m estimating pigs per litter were up 1.1% this spring, making the March-May pig crop 103.6% of a year ago. Feeder pig imports from Canada were up 14.7% this spring, so the light weight market hog inventory should be up a bit more than the pig crop implies.

My estimates of the June 1 market hog inventory by weight groups are: 180 pounds and heavier 108.5%, 120-179 pounds 108.0%, 60-119 pounds 107.0%, and under 60 pounds 103.7% of a year earlier.

My estimate of hogs in the 60-179 weight groups implies that third quarter hog slaughter will be 7% or so above year-ago levels, if the inflow of slaughter hogs from Canada continues to be below year-ago levels. I expect live hog prices to average close to $52/cwt in the third quarter of 2008.

I expect fourth quarter 2008 hog slaughter to be nearly 3% larger than the number slaughtered in October-December 2007. If so, look for fourth quarter 2008 hog prices to average close to $46/cwt on a live basis.

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