US Swine Economics Report - 30th June 2003.

Regular report by Ron Plain on the US Swine industry, this week reporting that the USDA quarterly survey of the nation's hog inventory showed numbers were very close to the average of pre-release trade forecasts, while farrowing intentions were not.
calendar icon 1 July 2003
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USDA said the June 1 breeding herd is 4.3% smaller than a year ago (average of trade forecasts: down 4.4%) and the market hog inventory is 2.4% below last year's level (trade average: down 2.6%).

The weight breakdown for the market hog inventory was also very close to trade forecasts. According to USDA, the inventory of hogs weighing 180 pounds or more on June 1 was down 0.5% (trade forecast: down 1.3%), the 120-179 pound group was down 1.7% (trade forecast: down 1.9%), the 60-119 pound group was down 3.5% (trade: down 3.1%) and the number of pigs weighing less than 60 pounds was down 2.8% (trade: down 2.6%).

USDA's farrowing intentions were well above the trade averages. USDA forecast June-August farrowings at 97.9% of year ago and September-November at 99.2%. The trade forecasts were for 96.7% for June-August farrowings and 97.1% for September-November.

If USDA's farrowing intentions number is right and if pigs per litter continue to increase (USDA said December-May pigs per litter was up 0.7% from a year ago) then the fall pig crop could be even with year ago levels. Since slaughter weights are likely to increase, even a small decrease in fall farrowings could mean that that spring 2004 pork production will be larger than this past spring.

How likely is it that USDA's forecast of September-November farrowings at 99.2% of year ago is accurate? Over the last four years, USDA's two-quarter-ahead forecast of farrowing intentions has turned-out to have been too low 4 times and too high 12 times. On average, the last 16 quarterly reports have over forecast two-quarter-ahead farrowings by 0.6 percentage points. So, the odds are things may not be quite so bleak.

USDA said the June 1 breeding herd was down 4.3% and the number of females bred in May was down 2.6%, neither of which are consistent with September-November farrowings being down only 0.8%. So there is good reason to be hopeful that farrowings will be smaller than USDA's forecasts. Let's certainly hope so, otherwise the bottom line for hog producer may be written in red ink again next year.

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