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September Quarterly Hogs & Pigs Report Analysis

01 October 2013
Ron Plain
Ron Plain

US - USDA’s September "Hogs and Pigs" report said the total inventory of hogs on US farms at the start of September was up 0.3 per cent from 12 months earlier, writes Ron Plain.

USDA said the market hog inventory was 0.3 per cent larger than a year ago and the number of hogs kept for breeding was up 0.4 per cent. (See Table 1 below) The trade was of two opinions on this report. Some expected a noticeable inventory decline due to the spread of the PED virus. Others, correctly, did not. The average of the pre-release trade estimates were for a 1.5 per cent increase in the swine breeding herd, a 1.7 per cent decrease in the market hog inventory, and a 1.4 per cent decrease in the total herd.

USDA made some downward revisions to past inventory estimates to bring them in line with summer hog slaughter. USDA lowered their previous estimate of the March market hog inventory by 430,000 head (0.7 per cent) and lowered their estimate of the June market hog inventory by 45,000 head (0.1 per cent). They decreased the reported number of sows farrowed during December-February by 35,000 (1.2 per cent) and also decreased the December-February pig crop by 357,000 head (1.2 per cent).

The September swine breeding herd is 68,000 head smaller than on June 1. In 2012, the September breeding herd inventory was 74,000 head smaller than on June 1. Thus, USDA says the breeding herd declined by 8,000 head fewer this summer than last. June-August sow slaughter was down 49,000 head (6.5 per cent) from a year ago. Imports of Canadian sows for slaughter were down by 5,800, leaving 43,900 (6.8 per cent) fewer US sows slaughtered this summer than last. The USDA data implies 37,900 fewer gilts were added to the breeding herd this summer than last.

USDA said summer (June-August farrowings were down 0.1 per cent from a year ago. They said farrowing intentions for fall are up 0.4 per cent compared with a year ago and winter farrowings are likely to be up 0.9 per cent compared to 12 months earlier. (See Table 3) Summer farrowings were 0.1 per cent higher than trade expectations but the same as the forecast made by the June inventory survey. USDA’s forecast of fall farrowing intentions is 0.6 per cent less than the pre-release expectations and 0.1 per cent less than the June report predicted. Winter farrowing intentions are 0.2 per cent below the trade forecast. USDA says the breeding herd is up 0.4 per cent. The number of litters to be farrowed in the next six months is expected to be up 0.7 per cent.

The number of pigs per litter during June-August, 10.33 head, was up 2.0 per cent from a year ago. The trade was expecting a 0.0 per cent increase. The 10.33 pigs per litter is a new record for any quarter. Summer farrowings were down 0.1 per cent but with 2.0 per cent more pigs per litter, the summer pig crop was up 1.9 per cent, which is 2.3 per cent more than the pre-release trade forecast.

USDA’s survey indicated the number of market hogs weighing 180 pounds or more on 1 September was down 3.5 per cent compared with 12 months earlier. (See Table 2) It looks like daily barrow and gilt slaughter in September was down 4.8 per cent compared to a year ago. The 120-179 pound market hog inventory was up 1.5 per cent from a year ago. The 50-119 pound inventory group was up 1.1 per cent from a year earlier. The inventory of pigs weighing less than 50 pounds was up 0.9 per cent compared to a year earlier.

Live animal imports from Canada during the June-August quarter showed feeder pigs down 11.9 per cent and slaughter hog imports down 7.8 per cent. The June-August pig crop was up 556,000 head (1.9 per cent). Weaner/feeder pig imports during June-August were down 140,620 head. The inventory of pigs weighing less than 50 pounds on 1 September was up 185,000 (0.9 per cent) which is lower than implied by the pig crop and imports.

Based on the market hog inventory and the expectation of a slow decline in live hog imports, our forecast is for an increase of 0.8 per cent in fourth quarter 2013 daily hog slaughter. With this level of pork production, we expect 51-52 per cent lean hogs to average in the lower $60s live and Iowa-Minnesota negotiated sales to average close to $85/cwt on a carcass weight basis.

For the first quarter of 2014 we expect hog slaughter to be up 1.2 per cent on a daily basis with 51-52 per cent lean hogs averaging in the mid $60s/cwt live and Iowa hogs averaging around $86/cwt on a carcass basis.

With the number of litters farrowed expected to be up 0.4 per cent this fall and pigs per litter increasing by 1.5 per cent or so, the fall pig crop is likely to be 2.0 per cent larger than a year earlier. We are forecasting second quarter 2014 daily slaughter to be up 1.7 per cent compared to a year ago. Look for carcass prices of barrows and gilts to average in the mid $70s/cwt.

The forecast 0.9 per cent increase in fall farrowings should be complemented by an increase in litter size to yield a winter pig crop that is up about 2.4 per cent compared to a year-earlier.

Our estimates of slaughter and prices for the next four quarters are in Table 4. We anticipate a tight supply of competing meats will allow 2013 hog prices to average slightly above a year earlier despite a slight increase in hog slaughter.

Table 1. Hog Inventories 1 September, US

  2013 as % of 2012
All hogs and pigs 100.3
Kept for breeding 100.4
Market hogs 100.3

Table 2. Market Hogs on Farms 1 September, US

Weight Category 2013 as % of 2012
Under 50 pounds 100.9
50 - 119 pounds 101.1
120 - 179 pounds 101.5
180 pounds and over 96.5
Pig Crop
June-August 101.9

Table 3. Sows Farrowed and Farrowing Intentions, US

  2012 as % of 2011
March-May 2012 102.2
June-August 2012 100.0
September-November 2012 98.6
  2013 as % of 2012
December-February 99.3
March-May 2013 98.0
June-August 2013 99.9
September-November 2013 100.4
  2014 as % of 2013
December-February 2014 100.9

Table 4. Commercial Hog Slaughter and Barrow and Gilt Price by Quarter

  Comm. Hog SlaughterBarrows & Gilts, price/cwt
Year & QuarterMillion headPercent Change from year ago51-52% Lean LiveIowa-Minn Base CarcassNon-packer-sold Net Carcass
MonthlyDaily
2008 1 29.601 +10.9% +10.9% $39.64 $52.49 $57.41
2 27.941 + 9.5 +9.5 52.51 70.43 72.24
3 28.696 + 8.0 +6.3 57.27 75.67 78.05
4 30.214 - 0.6 -0.6 41.92 55.60 61.38
Year 116.452 + 6.7 +6.3 47.83 63.58 67.27
2009 1 28.503 - 3.7% -2.2% $42.11 $57.23 $60.43
2 27.072 - 3.1 -3.1 42.74 57.32 61.76
3 28.428 - 0.9 -0.9 38.90 51.43 56.68
4 29.615 - 2.0 -2.0 41.20 54.98 57.64
Year 113.618 - 2.4 -2.0 41.24 55.23 59.11
2010 1 27.630 - 3.1% -3.1% $50.41 $66.81 $68.32
2 26.074 - 3.7 -3.7 59.60 79.04 79.42
3 26.930 - 5.3 -5.3 60.13 79.44 80.70
4 29.626 + 0.1 +0.1 50.11 65.20 69.26
Year 110.260 - 3.0 -3.0 55.06 72.67 74.47
2011 1 27.483 - 0.5% -2.1% $59.94 $79.28 $80.63
2 26.110 + 0.1 +0.1 68.80 91.80 92.39
3 27.379 + 1.7 +1.7 71.06 94.03 95.74
4 29.888 + 0.9 +2.5 64.66 85.03 87.39
Year 110.860 + 0.5 +0.5 66.11 87.54 89.04
2012 1 28.105 + 2.3% +2.3% $62.66 $84.78 $86.56
2 26.661 + 2.1 +2.1 61.79 85.45 87.76
3 27.965 + 2.1 +3.8 61.43 83.15 87.69
4 30.433 + 1.8 +0.2 58.63 79.93 82.87
Year 113.163 + 2.1 +2.1 61.13 83.36 86.23
2013 1 27.874 - 0.8% +0.8% $59.03 $80.17 $83.45
2* 26.773 + 0.4 +0.4 65.50 89.35 91.53
3** 28.515 + 2.0 +0.5 66 - 69 90 - 94 92 - 96
4** 30.510 + 0.3 +0.3 56 - 59 76 - 80 78 - 82
Year ** 113.672 + 0.5 +0.5 61 - 63 84 - 86 86 - 88
2014 1** 28.313 + 1.6% +1.6% $56 - 69 $77 - 81 $79 - 83
2** 27.310 + 2.0 +2.0 61 - 64 83 - 87 85 - 89
*estimated
**forecast

 

Further Reading

You can view the USDA Hogs and Pigs report by clicking here.

ThePigSite News Desk



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