Introduction

This document aims to pull together, in one place of reference, all the various information generated by the USDA Quarterly report. This document includes: USDA Quarterly report: March 2002
What it all means
Graph data from the report Hog Inventories by State (December 2001, internal link) For a PRINTABLE VERSION of the full 23 page report in PDF format, including all the tabular data which is not shown in this article, Click Here

Pigs & Hogs Report: March 2002

U.S. inventory of all hogs and pigs on March 1, 2002, was 58.7 million head. This was 2 percent above March 2001, but 1 percent below December 1, 2001.

Breeding inventory, at 6.24 million head, was up slightly from both March 1, 2001, and last quarter. Market hog inventory, at 52.5 million head, was 2 percent above last year but 1 percent below last quarter.

The December 2001-February 2002 U.S. pig crop, at 24.7 million head, was 3 percent more than 2001, and 1 percent more than 2000. Sows farrowing during this period totaled 2.83 million head, 3 percent above last year. The sows farrowed during this quarter represented 46 percent of the breeding herd. The average pigs per litter was 8.73 pigs saved per litter for the December 2001-February 2002 period, compared to 8.72 pigs last year. Pigs saved per litter by size of operation ranged from 7.30 for operations with 1-99 hogs to 8.80 for operations with more than 5,000 hogs and pigs.



U.S. hog producers intend to have 2.90 million sows farrow during the March-May 2002 quarter, 1 percent above the actual farrowings during the same period in 2001, and slightly above 2000. Intended farrowings for June-August 2002, at 2.90 million sows, are 1 percent above the same period in 2001, and up slightly from 2000.

The total number of hogs under contract, owned by operations with over 5,000 head, but raised by contractees, accounted for 31 percent of the total U.S. hog inventory, down from 32 percent last year.

Revisions
All inventory and pig crop estimates for March 2001 through December 2001 were reviewed using final pig crop, official slaughter, death loss, import, and export data in U.S. level balance sheets. Based on the findings of this review, adjustments of one percent were made to the September 1, 2001 inventory, two percent to the June-August 2001 pig crop, and one half percent to the December 1, 2001 inventory.

What it all means?

What the commentators and industry thinkers read into this data:

Commentary on the Quarterly Report - Ron Plain Ron Plain The USDA March Hogs and Pigs Report contained no major surprises. The total number of hogs was up 2%, the breeding herd was the same as a year ago, and the market herd was up 2.3% from 12 months ago. (See Table 1) The total herd and market herd were up a short 1% from the average trade estimates but were the same as our estimates. The breeding herd size was consistent with our gilt and sow slaughter data. The 180 lb. and heavier market inventories were up 1% and March marketings were up a little, but preliminary slaughter numbers show March was up less than 1%. However, we never argue with the accuracy of the report when the numbers are within 1% of our estimates. Farrowings in December-February were up 3% and pigs per litter were practically the same as a year earlier. However, Canada's farrowing intentions for January-March were up almost 8%. Combining the U.S. and Canada first quarter pig crop, assuming no productivity growth, shows a potential increase of 4% from 2001. With a 4% increase in slaughter, we estimate a terminal market price for July-September 2002 of $41-43 as an average. For April-May-June we estimate slaughter to be up 2% from 12 months ago with the high average quarterly price for 2002 at $45-48 per cwt. at terminal markets. Farrowing intentions for the U.S. and Canada show the potential for a 2% increase in fourth quarter slaughter, assuming no increase in litter size. This would give the U.S. a slaughter number for the fourth quarter of about 27 million head. Our slaughter in the fourth quarter of 1998 was 27,586,000 head. If we do not lose a slaughter plant before the fourth quarter, we may be able to get by with only minimal or no slaughter capacity problems. With no problems, we expect terminal market hog prices to be about $30 or a little better on average for October, November, and December. If we have slaughter capacity problems similar to 1994, prices will likely be pushed into the mid $20s or a bit lower for the fall low. If for any reason we have slaughter capacity problems similar to 1998, it is not possible to predict how low hog prices will be pushed. Estimated first quarter 2003 slaughter based on third quarter 2002 farrowing intentions suggests slaughter will be up about 2% from the first quarter of 2002. With this level of slaughter, we would estimate average prices at the terminal markets to be in the mid $30s in the first quarter of 2003. U.S. pork exports in January were up over 11% from a year earlier. However, we expect pork exports to be down compared to a year earlier as we go through spring. Our exports were quite large in 2001 due to the hoof and mouth disease outbreak in Great Britain. Live hog imports from Canada in January were up over 31% from a year ago, with feeder pig imports up over 55% and slaughter hog imports up a short 5%. Projecting a trend with one month's data is risky as to accuracy but, if we do continue through the year at the January rate, live hog imports from Canada would be about 7 million head with feeder imports between 4 and 5 million head. Last year we imported over 50% of Canada's pig crop increase as feeder pigs or slaughter hogs. U.S. pork imports for January were up less than 1% from January 2001. Our pork imports from Canada were up almost 8% and amounted to almost 85% of U.S. pork imports. Retail pork prices in January-February were up almost 4%. If these prices held close to the February level through March, we believe the odds are high that the demand at the consumer level was about the same as a year earlier. However, demand at the live price level was probably down for the quarter. We will not have the necessary data to calculate a demand index for the first quarter until May. Productivity growth for the year ending March 1, 2002, was about 1.6%, with 74% of the gain in heavier market weights. The productivity growth for the year ending March 1, 2001, was 2.61%; for the year ending March 1, 2000, it was 5.54%; and for the year ending March 1, 1999, it was 2.65%. The average litter size for the year ending March 1, 2002, was down 0.11%. Our estimates of slaughter by quarter for the next 12 months and prices estimates are in Table 4. Table 4. Estimated Commercial Hog Slaughter by Quarter and Terminal Market Prices 1997-2003 ______________________________________________________________________ Commercial Terminal Market 51-52% Lean Slaughter Barrows & Gilts Hogs Period (mil. hd.) (price/cwt.) (price/cwt.) ______________________________________________________________________ 2000 1 25.039 $39.11 $41.32 2 23.125 47.99 50.41 3 24.097 44.19 46.35 4 25.715 38.33 40.55 Year 97.976 42.41 44.66 2001 1 24.573 $40.77 $42.51 2 23.274 50.21 52.07 3 23.631 48.08 51.16 4 26.466 34.97 37.30 Year 97.944 43.51 45.76 2002 1 (part. est.) 24.507 $37.57 $39.35 2 (projected) 23.740 45 - 48 47 - 50 3 (projected) 24.575 41 - 44 43 - 46 4 (projected) 27.000 30 - 33 32 - 35 Year (proj.) 99.822 39 - 41 41 - 43 2003 1 (projected) 25.000 $33 - 36 $35 - 38 _____________________________________________________________________

Graph Data from the Report

Reliability of March 1 Hogs and Pigs Estimates

Survey Procedures: A random sample of 12,500 U.S. producers was surveyed to provide data for these estimates. Survey procedures ensured that all hog and pig producers, regardless of size, had a chance to be included in the survey. Large producers were sampled more heavily than small operations. Data were collected from about 10,100 operations, 81 percent of the total sample, during the first-half of March by mail, telephone, and face-to-face personal interviews. Regardless of when operations responded, they were asked to report inventories as of March 1.

Estimation Procedures: These hogs and pigs estimates were prepared by the Agricultural Statistics Board after reviewing recommendations and analysis submitted by each State office. National and State survey data were reviewed for reasonableness with each other and with estimates from past years using a balance sheet. The balance sheet begins with the previous inventory estimate, adds to it estimates of births and imports, and subtracts estimates of slaughter, exports, and deaths. This indicated ending inventory level is compared to the Agricultural Statistics Board estimate for reasonableness.

Revision Policy: Revisions to previous estimates are made to improve quarter to quarter relationships. Estimates for the previous four quarters are subject to revision when current estimates are made. In December, estimates for all quarters of the current and previous year are reviewed. The reviews are primarily based on hog check-off receipts and slaughter. Estimates will also be reviewed after data from the Department of Agriculture five-year Census of Agriculture are available. No revisions will be made after that date.

Reliability: Since all operations raising hogs are not included in the sample, survey estimates are subject to sampling variability. Survey results are also subject to non-sampling errors such as omissions, duplication, and mistakes in reporting, recording, and processing the data. The affects of these errors cannot be measured directly. They are minimized through rigid quality controls in the data collection process and through a careful review of all reported data for consistency and reasonableness.

To assist users in evaluating the reliability of the estimates in this report, the "Root Mean Square Error" is shown for selected items in the following table. The "Root Mean Square Error" is a statistical measure based on past performance and is computed using the difference between first and final estimates. The "Root Mean Square Error" for hog inventory estimates over the past 20 quarters is 1.1 percent. This means that chances are 2 out of 3 that the final estimate will not be above or below the current estimate of 58.7 million head by more than 1.1 percent. Chances are 9 out of 10 that the difference will not exceed 1.8 percent.

Source: Quarterly Hogs and Pigs Report, March 2002 - USDA National Agricultural Statistics Service