Ron Plain

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

In their June report, USDA predicted June-August farrowings would be down 1.3% and September-November farrowings would be down 0.1% compared to a year earlier. I believe summer farrowings were actually even with a year ago. I'm forecasting fall farrowings to be 1% larger than a year ago and winter farrowings to be 2% larger than a year earlier. I believe that pigs per litter this summer were 1% above year-ago levels, leaving the June-August pig crop 1% larger than a year ago.

My estimates of the September 1 market hog inventory by weight groups are: 180 pounds and heavier 104%, 120-179 pounds 103%, 60-119 pounds 102%, and under 60 pounds 101%. Hog slaughter during the past three weeks was 5.6% greater than during the same weeks last year. Hog slaughter during the next 3 weeks will need to average 2.4% above year-ago levels to make my 104% estimate of the 180 pound plus inventory group correct.

My estimate of the number of hogs in the 60-179 weight groups imply that fourth quarter hog slaughter will be 2.5% above year ago levels, assuming a steady inflow of slaughter hogs from Canada. Live hog prices should average in the upper $40s in the fourth quarter of this year. If my light weight inventory is correct, first quarter 2005 hog slaughter is likely to come in 1% above the number slaughtered in the first quarter of this year. If so, look for January-March hog prices to average close to $50/cwt on a live basis.

USDA is likely to make some upward revisions in their past numbers. Since the first of June, hog slaughter has been 3.3% above year ago levels, but it would have been up 3.5% had we not imported fewer slaughter hogs from Canada. This compares to the 2.1% increase implied by the June inventory report.

Like most industry analysts, I have found myself continually revising upward my 2004 estimates of both hog slaughter and prices. My forecasts above are higher than the trend from the previous pig reports, but I'm not sure they are high enough.