US Swine Economics Report

by 5m Editor
21 December 2004, at 12:00am

Regular report by Ron Plain on the US Swine industry, this week pointing out that the market hog inventory is 1% larger than on December 1, 2003.

Ron Plain
Ron Plain

Next week, USDA will release their 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 1% larger than on December 1, 2003. The total inventory, I believe, is up 1%.

In their September report, USDA predicted September-November farrowings would be up 0.8 and December-February farrowings would be up 1.0% compared to a year earlier. I believe both were good forecasts. I think actual fall farrowings were up 1% compared to a year ago. I'm forecasting winter farrowings to also be 1% larger than a year ago and spring farrowings to be 2% greater than a year earlier. I believe that pigs per litter this fall were 1% above year-ago levels, making the September-November pig crop 2% larger than a year ago.

My estimates of the December 1 market hog inventory by weight groups are: 180 pounds and heavier 101%, 120-179 pounds 101%, 60-119 pounds 101%, and under 60 pounds 102%. Hog slaughter during the past three weeks was 1.1% lower than during the same weeks last year. However, most of this decline is due to reduced imports of slaughter hogs from Canada. Hog slaughter during the next 3 weeks will need to average 3% above year-ago levels to make my 101% estimate of the 180 pound plus inventory group correct.

My estimate of the number of hogs in the 60-179 weight groups imply that first quarter hog slaughter will be 0.5% above year ago levels, assuming a continuing slowdown in the inflow of slaughter hogs from Canada. I expect live hog prices to average in the low $50s in the first quarter of 2005.

If my light weight inventory is correct, second quarter 2005 hog slaughter is likely to be 1.5% above the number slaughtered in the second quarter of this year. If so, look for April-June hog prices to average close to $55/cwt on a live basis.

USDA is not likely to make any major revisions in their last report. Since the first of September, slaughter of U.S. raised hogs has been within 0.2% of the number implied by the September inventory report.

This has been the most profitable year since 1990 for U.S. hog producers. Yet, we see no signs of an expansion in the breeding herd, implying another very good year in 2005. History says this won't last.

5m Editor