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 2003
What it all means
Graph data from the report Hog Inventories by State (December 2001) For a PRINTABLE VERSION of the full 30 page report in PDF format, including all the tabular data which is not shown in this article, Click Here

Pigs & Hogs Report: March 2003

U.S. inventory of all hogs and pigs on March 1, 2003, was 58.1 million head. This was 2 percent below March 1, 2002, and 2 percent below December 1, 2002.

Breeding inventory, at 5.96 million head, was down 4 percent from March 1, 2002, and down 1 percent from last quarter.

Market hog inventory, at 52.2 million head, was 2 percent below last year and 3 percent below last quarter.

The December 2002-February 2003 U.S. pig crop, at 24.4 million head, was 2 percent less than 2002, and 2 percent more than 2001. Sows farrowing during this period totaled 2.77 million head, 2 percent below last year.

Sows farrowed during this quarter represented 46 percent of the breeding herd.

Average pigs per litter was 8.81 pigs saved per litter for the December 2002-February 2003 period, compared to 8.74 last year.

Pigs saved per litter by size of operation ranged from 7.60 for operations with 1-99 hogs to 8.90 for operations with more than 5,000 hogs and pigs.


U.S. hog producers intend to have 2.84 million sows farrow during the March-May 2003 quarter, 3 percent below the actual farrowings during the same period in 2002, and 1 percent below 2001.

Intended farrowings for June-August 2003, at 2.79 million sows, are 3 percent below the same period in both 2002 and 2001.

The total number of hogs under contract, owned by operations with over 5,000 head, but raised by contractees, accounted for 35 percent of the total U.S. hog inventory, up from 31 percent last year.

All inventory and pig crop estimates for March 2002 through December 2002 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, 2002 inventory, two percent to the June-August 2002 pig crop, and one percent to the December 1, 2002 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 Hogs and Pigs report for March 1, 2003, came in very close to the average of the trade estimates. The market herd was a little smaller than our estimate but the breeding herd estimate by USDA was very consistent with gilt and sow slaughter indications. Slaughter for the first quarter was over 2% above our expectations based on the December report. USDA revised the market inventories up for both the September and December reports. The 4% decline in the breeding herd and the 2% decline in the market inventories is progress in the correct direction but the decline is not enough to push hog prices above breakeven for the average producer for many months during 2003 unless we have a pleasant surprise from either or both the supply and demand side of the equation. Demand at the consumer level for 2002 did show a little growth and hopefully this growth will continue through this year. USDA is estimating beef supplies in 2003 will be down nearly 3% from 2002. Broiler production is forecast by USDA to be down in the first three quarters of 2003 but up sharply from a year earlier in the fourth quarter of 2003. For the year, broiler production is forecast to be up about one-quarter percent compared to 2002. Turkey production is forecast to be down slightly this year compared to last year. Cold storage stocks are at high levels and will continue to be negative to prices. Hopefully 2003 will be the thirteenth consecutive year of pork export growth. Pork exports in 2002 were 6.6 times larger than in 1990. Any growth in exports will be positive to cash hog prices. The number of sows farrowing in the December to February period was down nearly 2.5% rather than the 1% indicated in the December report. This is more consistent with the breeding herd being down 3% on December 1. Farrowing intentions for both March-May and June-August of 2003 are down nearly 3.5%. Even though the breeding herd on March 1 was down nearly 4.5%, a farrowing number down nearly 1% less than the reduction in the breeding herd is not only possible but likely due to productivity growth. Slaughter during March up about 1.7% is consistent with the 180 pound and heavier market inventories which were up 1.2% from last year. The heavier weight market inventories indicate slaughter for April-June will be down about 2.5% from 2002. The probabilities are extremely high that the April-June slaughter in 2003 will again be the smallest quarterly slaughter for this year. The lighter weight market inventories suggest July-September slaughter will be down about 2% from last year. Farrowing intentions for both the second and third quarter this year show the potential for about a 3.5% decline from 2002. At this time we doubt slaughter for the fourth quarter of 2003 and the first quarter of 2004 will be down this much due to productivity growth. The March 1 report continues to reflect the change in the structure of the hog industry with the quite modest drop in market inventories and pig crops following 17 consecutive months of losses to the average hog producer based on the Iowa data. Our estimates of prices and slaughter by quarter for the next year are in Table 4. We believe the $5-8 increase in the second quarter price is not only possible but likely due to all of the negative price factors in the second quarter of 2002 that hopefully will not occur again this year. Table 1. Hog Inventories March 1, U.S. ______________________________________________________________ 2003 as % of 2002 Market 98 Kept for breeding 96 All hogs and pigs 98 ______________________________________________________________ Table 2. Market Hogs on Farms March 1, U.S. _____________________________________________________________ Weight Category 2003 as % of 2002 Under 60 pounds 98 60 - 119 pounds 98 120 - 179 pounds 98 180 pounds and over 101 _____________________________________________________________ Table 3. Sows Farrowing and Intentions, U.S. _____________________________________________________________ Quarter 2002 as % of 2001 September-November 98 2003 as % of 2002 December-February 98 March-May 97 June-August 97 ______________________________________________________________ Table 4. Estimated Commercial Hog Slaughter by Quarter and Live Hog Prices 1997-2003 ____________________________________________________________________ Commercial Terminal Market 51-52% Lean Slaughter Barrows & Gilts Hogs Period (mil. hd.) (price/cwt.) (price/cwt.) ____________________________________________________________________ 1997 1 22.308 $51.01 2 21.831 56.43 3 22.679 54.09 4 25.142 43.69 Year 91.960 51.30 1998 1 24.776 $34.74 2 23.628 39.42 3 25.039 33.62 4 27.586 19.49 Year 101.029 31.82 1999 1 25.579 $26.55 $28.83 2 24.288 33.06 35.18 3 24.953 32.78 35.70 4 26.724 33.88 36.29 Year 101.544 31.57 34.01 2000 1 25.039 $39.11 $41.14 2 23.125 47.99 50.43 3 24.097 44.19 46.44 4 25.715 38.33 40.78 Year 97.976 42.41 44.70 2001 1 24.578 $40.77 $42.83 2 23.280 50.21 52.05 3 23.635 48.04 51.05 4 26.469 34.97 37.30 Year 97.962 43.50 45.81 2002 1 24.148 $37.23 $39.43 2 24.280 32.77 34.99 3 25.120 31.09 33.86 4 (part. est.) 26.715 28.52 31.34 Year (proj.) 100.263 32.40 35.91 2003 1 (part. est.) 24.600 $34.85+/- $36.35+/- 2 (projected) 23.675 38 - 41 40 - 43 3 (projected) 24.615 36 - 39 38 - 41 4 (projected) 25.915 34 - 37 36 - 39 Year (proj.) 98.805 35 - 38 37 - 40 2004 1 (projected) 24.000 $36 - 39 $38 - 41 ____________________________________________________________________

Graph Data from the Report

Reliability of March 1 Hogs and Pigs Estimates

Survey Procedures: A random sample of roughly 12,100 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 9,800 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 the estimates of births and imports, and subtracts the 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 1.0 percent. This means that chances are 2 out of 3 that the final estimate will not be above or below the current estimate of 58.1 million head by more than 1.0 percent. Chances are 9 out of 10 that the difference will not exceed 1.8 percent.

Source: Quarterly Hogs and Pigs Report, March 2003 - USDA National Agricultural Statistics Service