US - USDA will release the results of its hogs and pigs inventory survey on Tuesday, 23 December, 2014 and we will discuss what analysts expect the inventory survey to show, write Steve Meyer and Len Steiner.
The pig crop data from this survey is used by industry to project supplies in the coming quarters.
The breeding stock numbers, on the other hand, provide the best indication as to what kind of expansion (or contraction) in supplies should we expect in the coming years. On this last topic, there has been some conversation in the industry, and something we have mentioned in this report, about slaughter capacity in the next two years.
The outbreak of PEDv in 2013-14 was a dramatic setback for US pork production, which has been steadily increasing in recent years. Excellent profits in 2014 and corn prices in the $4 range are expected to further bolster hog numbers in 2015 and 2016.
The question is whether at some point in the fall of 2016 industry once again bumps against slaughter capacity constrains. The chart above shows weekly slaughter so far this year and projections for weekly slaughter in 2015 based on the September Hogs and Pigs inventory data.
Steve Meyer has maintained a detailed database of hog slaughter plants and capacity for many years and his Spring 2014 survey pegged the weekly slaughter capacity at 2.438 million head per week.
We got relatively close to that number in the fall of 202 when weekly slaughter for a couple of weeks was a little over 2.4 million head. And then for a few weeks in November and December of last year weekly slaughter was around 2.35 million head.
Based on current projections, we will likely have about five per cent of spare capacity in the fourth quarter of 2015 but that forecast reflects estimates from the September Hogs and Pigs report.
There is a good chance that the slaughter numbers for next fall may be revised higher to reflect the improvement in the pig crop (fewer PEDv and PRRs deaths) and a larger breeding stock as of 1 December.
In our view, the breeding herd number as of 1 December will be one of the key numbers to watch in the upcoming report. Is it possible that we may run out of hog processing capacity similar to what happened in 1998?
This is always a risk that hog producers needs to be aware of, which is why the opening of a new hog processing plants by the Clemens Food Group is a welcome development. Clemens Food Group is based in Hafield PA and currently operates a plant there with a daily processing capacity of 10,400 head.
The new $255-million pork processing plant will be built in Coldwater, MI and a report from Feedstuffs says that it will process about 10,000 hogs per day.
The plant is scheduled to become operational in the fall of 2017 and will add about 0.4 per cent to US processing capacity. A brand new hog processing capacity is good news for hog producers locally as well as the pork industry overall.
ThePigSite News Desk
Top image via Shutterstock