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Pork Commentary: June USDA Hogs and Pigs Report

29 June 2010
Jim Long on ThePigSite

Jim Long is President &
CEO of Genesus Genetics.

CANADA - This week's North American Pork Commentary from Jim Long.

1 June USDA Hogs and Pigs Report
1000
  2009 2010 2010% of 2009
Kept for Breeding 5968 5788 97
Market 60842 58612 96
Hogs and Pigs by Weight Group
Under 50 lbs 19554 18879 97
50 – 119 lbs 17838 16877 95
120 – 179 lbs 12604 12279 97
180 pounds and over 10847 10578 98
Pig Crop
March - May 29012 28199 97
Sows Farrowing 3018 2875  
March – May Pigs per litter 9.61 9.81 102

Other Observations

  • The Market inventory shows a year over year decline of around 1.8 million head. That’s about 75,000 a week less hogs coming to market year over year over the next four months. Definitely fewer hogs and that will continue to support market hog prices.

  • The June USDA report indicates that the breeding herd is about 180,000 head fewer than a year ago. On the flip side it indicates the breeding herd grew 28,000 from 1 March. We expect to see little expansion over the summer quarter, a quarter that historically has been one of liquidation and of little expansion.

  • The March – May Pig Crop was around 800,000 fewer than the same quarter a year ago. This trend to fewer pigs will continue through the year with the practical and biological fact it is now almost impossible to place gilts and get their offspring to market before next summer. We can now almost guarantee profitable hogs into the fall of 2011. After that the jury is out, and looking for evidence.

  • The March – May litter size is up 4/10 of a litter in the last two years. The genetic strides in our industry are being seen in the market place. Genetic gains of .25 a litter are still being made. We expect this productivity trend to continue. Swine Genetics Companies that can’t keep up will be punished in the marketplace with lost business.

  • The June Report shows of the 180,000 fewer sows year over year. There were 110,000 less in North Carolina, Texas 40,000. Other smaller non Midwest States 45,000. For all intents and purposes the Midwest breeding herd held over the last twelve months. Why? We would guess land value, packer availability, faith in the future? If you went to war there is no doubt you want to fight in a unit of wild bunch pig producers. Fighters who despite all odds survive.

Ontario Pork Congress

Last week we attended the Ontario Pork Congress. Our observations:

  • Ontario has downsized about 100,000 sows from its peak inventory four years ago going from about 430,000 to 330,000 sows. What we found surprising is the generally positive attitude of the attendees despite the dismal economic reality of the last few years.

  • We were told that existing sow units are valued at between 10% to 40 per cent of new. Fortunately producers selling out have been helped by the high value of farm land which is now touching $10,000 per acre. We heard of no empty sow units being restocked.

  • One of the big issues with Ontario producers is the future of Maple Leaf Foods slaughter plant in Burlington Ontario. With a capacity of about 42,000 head per week (currently operating at about half capacity), Maple Leaf announcement a few weeks ago to try to actively sell the plant has made many producers nervous. Not so much about them selling it but the fear that it might be closed. A closure would short Ontario’s slaughter capacity below production. Unfortunately with Ontario’s weekly marketing’s between 70-80,000, a new potential buyer has to wonder about potential supply.

  • Ontario’s industry is dominated by family owned and operated land based businesses. From what we can determine, the largest producer has under 20,000 sows with maybe 5 producers over 5,000 sows in the 330,000 sow total inventory. As a group they are good producers and most will and can stay in as long as they want.

Summary

The June USDA Hogs and Pigs Report confirmed what most expected - Fewer pigs and hogs. We expect cash prices to trend higher, soon reaching into the mid 80’s. Our industry barring an unforeseen health or trade issue will be profitable through the summer of 2011.

Author: Jim Long, President & CEO, Genesus Genetics

To find out more about Genesus Genetics,
please take the time to visit their website at
www.genesus.com.

The opinions expressed in this commentary are entirely those of the author and can not taken to represent the views of ThePigSite.com, its owners or its management.



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