US Swine Economics Report

Regular report by Ron Plain on the US Swine industry, this week discussing the upcoming Quarterly Hog Report.
calendar icon 22 June 2006
clock icon 3 minute read
Ron Plain
Ron Plain

Next week, USDA will release the results of their latest quarterly survey of the nation's hog inventory. My calculations indicate the breeding herd is 1.5% larger than a year earlier and the market hog inventory is 0.3% larger than on June 1, 2005. These are very small increases given that the hog producers have 28 consecutive months of profit behind them.

Hog slaughter is averaging about 0.1% above the level implied by the March inventory report, so don't look for USDA to make any major revisions in the size of last fall's pig crop.

In their March report, USDA predicted March-May farrowings would be 0.5% larger than a year earlier and June-August farrowings would be up 0.2%. I agree with USDA's forecast that spring farrowings were up 0.5%. I expect summer farrowings also to be 0.5% larger than last year. I'm predicting fall 2006 farrowings will be 1% greater than September-November 2005.

I believe that pigs per litter this spring were 0.7% above year-ago levels, making the March-May pig crop 101.2% of a year ago. Feeder pig imports are well ahead of last year's pace, so the market hog inventory is up more than the pig crop.

My estimates of the June 1 market hog inventory by weight groups are: 180 pounds and heavier 97.5%, 120-179 pounds 100.0%, 60-119 pounds 100.9%, and under 60 pounds 101.5% of a year earlier. Hog slaughter since June 1 is down 1.8% compared to the same days last year. Hog slaughter during this week and the next two will need to average 3.2% below year-ago levels to make my 97.5% estimate of the 180 pound plus inventory group correct.

My estimate of the number of hogs in the 60-179 weight groups implies that third quarter hog slaughter will be 0.4% 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 third quarter of 2006.

If my estimate of the light weight inventory is correct, fourth quarter 2006 hog slaughter is likely to be 1-2% larger than the number slaughtered in October-December 2005. If so, look for late fall hog prices to average close to $40 on a live basis, $4-5/cwt lower than the year-earlier price level.

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