Ron Plain

On Friday, USDA will release the results of their latest quarterly survey of the nation's hog inventory. My calculations indicate both the breeding herd and the market hog inventory are 2% larger than on March 1, 2005. This is a fairly small increase given that the industry has 25 consecutive months of profit behind it.

Hog slaughter has been averaging about 1% above the level implied by the December inventory report, so look for USDA to make some modest upward revisions in the size of last summer's pig crop.

In their December report, USDA predicted December-February farrowings would be 1.5% larger than a year earlier and March-May farrowings would be up 0.3%. I agree with USDA's forecast that winter farrowings were up 1.5%. I expect spring farrowings to be 1% larger than last year. I'm predicting summer 2006 farrowings will be 2% greater than June-August 2005.

I believe that pigs per litter this winter were 0.7% above year-ago levels, making the December-February pig crop 102.2% of a year ago.

My estimates of the March 1 market hog inventory by weight groups are: 180 pounds and heavier 102.3%, 120-179 pounds 101.3%, 60-119 pounds 101.3%, and under 60 pounds 102.8% of a year earlier. Hog slaughter during the past three weeks was up 2.7% compared to the same weeks last year. Hog slaughter during the next 3 weeks will need to average 2.0% above year-ago levels to make my 102.3% estimate of the 180 pound plus inventory group correct.

My estimate of the number of hogs in the 60-179 weight groups implies that second quarter hog slaughter will be 1.3% above year-ago levels, assuming the inflow of slaughter hogs from Canada is close to year-ago levels. I expect live hog prices to average in the upper $40s in the second quarter of 2006.

If my estimate of the light weight inventory is correct, third quarter 2006 hog slaughter is likely to be nearly 3% larger than the number slaughtered in July-September 2005. If so, look for late summer hog prices to average in the low $40s on a live basis, $5-10/cwt lower than the summer of 2005. In addition to more hogs, I am expecting 1-2 pound heavier slaughter weights and weaker domestic demand than last year. Fortunately, export demand is expected to be up again in 2006.