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US Swine Economics Report

by 5m Editor
22 June 2004, at 12:00am

Regular report by Ron Plain on the US Swine industry, this week saying that the breeding herd is down 2% from a year ago.

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This Friday USDA will release their next quarterly survey of the nation's hog inventory. My calculations indicate the breeding herd is down 2% from a year ago and the market hog inventory is 3% larger than on June 1, 2003. The total inventory, I believe, is up 2%.

In their March report, USDA predicted March-May farrowings would be down 1% and June-August farrowings would be down 2% compared to a year earlier. I'm less optimistic. I believe spring farrowings were actually 1% larger than a year ago. I'm forecasting summer farrowings to be even with a year ago and fall farrowings to be 1% smaller than a year earlier. I believe that pigs per litter this spring were close to last year's level, leaving the March-May pig crop 1% larger than a year ago.

My estimates of the June 1 market hog inventory by weight groups are: 180 pounds and heavier 103%, 120-179 pounds 104%, 60-119 pounds 103%, and under 60 pounds 101%. Hog slaughter during the last four weeks was 4.8% greater than during the same weeks last year. Since the number of slaughter hogs imported from Canada each week has been running 15-20 thousand head above year ago levels, U.S. hog slaughter during these four weeks probably would have been up 3.8% had we received the same number of Canadian slaughter hogs as last year. Hog slaughter during the next 2 weeks will need to average 2.8% above year-ago levels to make my 103% estimate of the 180 pound plus inventory group correct.

My estimate of the number of hogs in the 60-179 weight groups imply that third quarter hog slaughter will be 4-5% above year ago levels, assuming a continuation in the rate at which Canadian slaughter hogs are coming south. Live hog prices should average in the low $50s in the third quarter this year. If my light weight inventory is correct, fourth quarter 2004 daily hog slaughter is likely to come in 2% above the number slaughtered in the fourth quarter of 2003. If so, look for October-December hogs to average close to $42/cwt on a live basis.

USDA may make some small upward revisions in their past numbers. Since the first of March, hog slaughter has been 3.4% above year ago levels, but it would have been up only 2.4% had we not imported more slaughter hogs from Canada. This is 0.8% more than the level implied by the March quarterly report.

5m Editor