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December Quarterly Hogs & Pigs Report Summary
US - USDA's December Hogs and Pigs report came in reasonably close to trade estimates, write Glenn Grimes and Ron Plain.
Ron Plain
The total number of hogs and pigs in inventory December 1 was down 2.2 per cent; the trade estimate was for a 1 per cent decline. The breeding herd was down 2.4 per cent according to USDA; the trade estimate was for a 3.3 per cent decline. USDA's market herd inventory was down 2.2 per cent; the trade estimate was for a 0.7 per cent decline. (See Table 1) The USDA report is fairly consistent with our gilt slaughter data.
December's slaughter, when adjusted for the decline in imports of Canadian slaughter hogs, shows a slightly larger domestic slaughter than indicated by the number of 180 lb. and heavier hogs in inventory, which were down 0.4 per cent from a year ago.
The 2.5 per cent increase in pigs per litter in June-November 2008 compared to a year ago is positive for producers' cost of production. However, this productivity growth brings about a larger supply of pork which is negative for hog and pork prices.
The trend in live hog imports from Canada indicates the number of live hogs imported in 2009 is likely to be down compared to 2008. Slaughter is likely to be reduced by 1-2 per cent in each quarter of 2009 because of the reduction in live imports. The strengthening of the US dollar relative to the Canadian dollar and Country of Original Labeling are expected to reduce live animal imports and increase pork product imports from Canada in 2009.
Net pork exports as a percent of pork production in the US increased from 9.3 per cent in January-October 2007 to 17.3 per cent in 2008. In other words, we reduced the amount of pork available in the US by about 8 per cent because of more exports and fewer imports than a year ago.
We are forecasting a small reduction in net pork exports as a percent of production during the first and third quarters of 2009, a reduction of 4-6 per cent in the second quarter, and a little increase in the fourth quarter. The result of this forecast is a decline in US pork exports during 2009 for the first time in 19 years.
US pork exports have done fabulously well this year, but the trend is slowing. For January through October 2008 US pork exports were up 60.7 per cent. In October, exports were up only 25.4 per cent. Exports of pork to China and Hong Kong for January-October were up 204 per cent in 2008 from 2007. However, for the month of October our pork exports to China and Hong Kong were down 29.1 per cent from October 2007.
Live hog imports for January-September were up 1.8 per cent. Feeder pig imports for October were down 3.3 per cent and slaughter hog imports were down 60.6 per cent from a year ago.
Our demand index for pork at the consumer level for January-November 2008 was down 5.6 per cent from a year earlier. The good news continues to be live hog demand which was up 6.2 per cent in the first 11 months of 2008 compared to 2007. The much stronger demand for live hogs than consumer demand for pork is mostly due to the nearly 61 per cent increase in exports and the nearly 17 per cent decline in imports.
The heavier weight market hog inventories in the December report, along with some decline in slaughter imports from Canada, and one fewer weekday, indicate first quarter 2009 slaughter will be down more than 2 per cent but increased pork imports and decreased pork exports are likely to offset this decline so the daily domestic pork supply will be about the same as January-March of 2008.
The lighter weight inventories and fewer slaughter hog imports from Canada indicate slaughter for April-June will be down roughly 6 per cent from the second quarter of 2008. Here again more pork imports and less pork exports are expected to keep domestic pork supplies nearly flat compared to a year ago.
Farrowing intentions for December-February are for a 3.3 per cent decline in farrowings which will be partially offset by more pigs per litter. The reduction in slaughter hog and feeder pig imports from Canada is likely to reduce slaughter by another 2 per cent but decreased pork exports and increased pork imports will likely offset the reduction in imports from Canada.
Farrowing intentions for March-May are down 1.6 per cent from a year earlier. This decline is expected to be offset by productivity growth, but fewer live hog imports from Canada should result in fourth quarter slaughter being down a little. It is also hoped that pork exports in the fourth quarter will be a little larger than in 2008.
The bottom line is that our midpoint price estimate for 2009 is the same to $1 per cwt. higher for live hogs in 2009 than in 2008. Our estimates for slaughter and prices by quarter for the next year are in Table 4.
Table 1. Hog Inventories December 1, U.S.
______________________________________________________________
2008 as % of 2007
Market 97.8
Kept for breeding 97.6
All hogs and pigs 97.9
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Table 2. Market Hogs on Farms December 1, U.S.
______________________________________________________________
Weight Category 2008 as % of 2007
Under 60 pounds 94.5
60 - 119 pounds 99.5
120 - 179 pounds 100.5
180 pounds and over 99.6
______________________________________________________________
Table 3. Sows Farrowing and Intentions, U.S.
______________________________________________________________
2008 as % of 2007
June-August 98.1
September-November 94.0
2009 as % of 2008
December-February 96.7
March-May 98.4
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Table 4. Estimated Commercial Hog Slaughter by Quarter and Live Hog Prices
______________________________________________________________________________________
Commercial Terminal Mkt. 51 52% Lean Non packer sold
Slaughter Barrow & Gilt Hogs Hogs (avg. net
Period (mil. hd.) (price/cwt) (price/cwt) carcass price/cwt)
_________________________________________________________________________
2003 1 24.654 $33.32 $35.38 $50.40
2 23.922 39.86 42.64 58.92
3 24.747 38.66 42.90 59.27
4 27.608 34.15 36.89 52.36
Year 100.931 36.50 39.45 55.25
2004 1 25.717 $40.82 $44.18 $60.56
2 24.737 51.56 54.91 72.74
3 25.817 53.72 56.58 74.73
4 27.192 50.58 54.35 71.58
Year 103.463 49.17 52.51 69.90
2005 1 25.538 $48.46 $51.92 $69.33
2 25.030 49.08 52.09 70.25
3 25.528 46.72 50.51 68.37
4 27.486 42.20 45.54 61.68
Year 103.582 46.62 50.02 67.43
2006 1 26.208 $39.23 $42.63 $58.37
2 24.839 45.81 48.45 65.96
3 25.810 46.92 51.83 69.13
4 27.880 41.56 46.13 62.04
Year 104.737 43.38 47.26 63.86
2007 1 26.684 $41.49 $46.04 $62.69
2 25.526 48.14 52.55 71.39
3 26.566 45.07 50.34 69.17
4 30,396 33.61 39.44 56.83
Year 109.172 42.08 47.09 65.04
2008 1 29.597 $33.86 $39.64 $57.41
2 27.942 46.68 52.51 72.24
3 28.702 51.76 57.27 78.05
4 (part. est.) 30.237 37.43 41.90 61.40
Year (est.) 116.478 41.43 47.84 67.28
2009 1 (projected) 28.800 $35 - 39 $40 - 44 $56 - 61
2 (projected) 26.300 43 - 47 48 - 52 66 - 71
3 (projected) 27.800 48 - 52 53 - 57 73 - 78
4 (projected) 30.000 37 - 41 42 - 46 58 - 63
Year (proj.) 112.900 41 - 45 46 - 50 63 - 68
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Further Reading
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- | You can view the USDA Quarterly Hogs and Pigs Report - December 2008 by clicking here. |
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