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Commentary: June 2006 USDA Hogs and Pigs Report

by 5m Editor
4 July 2006, at 12:00am

US - Dr Mike Brumm, Extension Swine Specialist, University of Nebraska comments on the latest USDA Hogs and Pigs report.

Mike Brumm
Mike Brumm

As other commentators have already noted, there weren’t many surprises in the June 1, 2006 USDA Hogs and Pigs report released on June 30, at least as the report related to the overall numbers of pigs in the US breeding herd and the kept for market category.

However, the report does spell out where modest expansion is occurring and where changes in the mix of breeding and market inventories continue to occur. With transportation expenses rising significantly in response to rising fuel prices, it would seem logical that any future investments in production facilities, both farrowing and wean-finish, will include consideration of the cost to transport weaned pigs to finishing facilities and the cost to transport slaughter ready animals to slaughter plants.

Table 1: Ranking of all states with all hogs and pigs inventories greater than 1 million head, June 1, 2006.

Table 2: March 1 to May 30, 2006 Pig Crop in all states farrowing over 100,000 sows.

Table 3: Farrowing intentions relative to 2005 farrowings.

After years of declining inventory, Nebraska has remained relatively stable in both the breeding and kept for market inventory. In the past 2 years (September, 2004 to June 1, 2006), Nebraska’s share of the US breeding inventory has ranged from 6.04% to 5.82% and currently stands at 6.02%. Inventory in the kept for market category has ranged from 4.38% to 4.71% and currently stands at 4.62%. Inventory of all hogs and pigs ranged from 4.53% to 4.83% and currently stands at 4.76%.

At look at Table 3 (Farrowing Intentions) suggests that Indiana may be the state with the biggest breeding herd expansion plans. The large jump in farrowing intentions for the September-November period corresponds with rumored construction completion dates for several breeding herd projects in the Hoosier State. The lack of any increase in farrowing intentions for the majority of states also corresponds with trade expectations of limited overall US expansion.

Another state that continues to change in regard to the structure of it’s swine inventory is Minnesota. Historically a state that had similar percentages of the breeding inventory and the kept for market inventory, Minnesota now has 11.14% of the kept for market inventory and only 9.74% of the breeding inventory. The difference in inventory is mostly accounted for by the large influx of Canadian born feeder pigs. Minnesota is the number 2 state (behind Iowa) for Canadian feeder pig imports.

Canadian feeder pig imports are on track to set a record in 2006. As of June 24, 2006, US producers have imported an average of 111,529 Canadian feeder pigs per week into US facilities for growth to slaughter. At this rate, total feeder imports for 2006 could end up being near 5.8 million head, well ahead of the 5.55 million head record imports in 2004.

Additionally, there have been several reports in the Canadian press recently about Canadian producer desires to invest in wean-finish facilities in the upper mid-west. The strong Canadian dollar relative to the US dollar (>$1.60 CD per US D in early 2002 vs $1.11 CD per US D today) means these producers view ownership of pigs and facilities in the US as a hedge against the US-Canadian exchange rate. In addition, ownership of pigs and facilities in the upper mid-west gives them access to relatively cheap feed ingredients.

There has been considerable speculation by producers and their advisors about the impact of the rapid growth in corn-based ethanol production on feed prices. In addition, many rural communities which have traditionally opposed expansion of swine finishing facilities have supported construction of ethanol plants. One of the major reasons for support of ethanol plants has been the number of jobs created in the local community. Let’s take a look at the impact of swine wean-finish facilities versus ethanol plants on the employment opportunities in rural communities. For purposes of this comparison, I’ll use a dry-mill ethanol plant that consumes 16 million bushels of corn per year to produce 40-42 million gallons of ethanol. In most instances this plant will creat 35 to 40 full-time jobs.

Growing a pig from weaning to slaughter requires 9.3 bushels of corn (in addition to soybean meal and other ingredients). It also requires 0.35 hours of labor (www.finbin.umn.edu). If we assume there are 2200 hours of labor per full-timeequivalent per year (42.3 hr/week), this 16 million bushels of corn equates to 1.72 million pigs grown to slaughter, creating 274 full time jobs in the daily care of the pigs.

Further Reading

To view the Microsoft Word version of this report, including all the graphs, Click Here (.doc file)

To read the June 2006 Quarterly Pigs and Hogs report, click here

ThePigSite News Desk

5m Editor