Ron Plain

U.S. pork producers are enjoying a long run of profitability. July was the 30th consecutive profitable month for typical farrow to finish operations. This is the longest string of profits since the late 1970s. Yet, the odds are good that profitability will last several more quarters. The demand for pork for export is very strong, domestic demand is fairly stable and the swine herd is growing very slowly.

USDA said the U.S. breeding herd was only 1.4% above the year-earlier level on June 1. Statistics Canada recently released the results of their July hog inventory survey. For the third consecutive quarter, the Canadian sow herd is smaller than a year ago.

The lack of growth in Canada is a remarkable change from the recent past. From 1997 through 2004, the Canadian pig crop averaged 7.5% larger than 12 months earlier. The 2005 Canadian pig crop was only 0.67% larger than in 2004 and the pig crop during the first half of 2006 was 0.24% smaller than during January-June 2005. If this continues in the second half of the year, 2006 will be the first year since 1993 with a Canadian pig crop below year-ago levels.

The growth in the Canadian swine herd from 1993 through 2004 was one of the primary factors that made that period one of low profits for U.S. hog producers. In 2004, the U.S. pig crop totaled 102.781 million head, 5.455 million head more than in 1993. In 2004, the Canadian pig crop totaled 33.1627 million head, 16.5957 million head larger than in 1993. Thus, 75.3% of the growth in the North American pig crop during these years occurred in Canada. A slowdown in the expansion of the Canadian sow herd will go a long way towards bring stability to production.

The Statistics Canada inventory report also indicated a slowdown in Canadian breeding herd productivity. The number of pigs produced per breeding animal during the first half of 2006 was only 0.3% higher than 12 months earlier and only 0.05% greater than for January-June 2004. During the previous eight years, annual growth in Canadian pig crop per breeding animal averaged 3.1%.

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