Ron Plain

On September 29, USDA will release the results of their latest quarterly survey of the nation's hog inventory. My calculations indicate the breeding herd is 1.2% larger than a year ago and the market hog inventory is 1.3% larger than on September 1, 2005. These are small increases given that hog producers have 31 consecutive months of profit behind them. Sow slaughter during June-August was up 5.4% compared to last summer's low total. Summer hog slaughter was 1% above the level implied by the June inventory report.

In their June report, USDA predicted June-August farrowings would be 0.1% larger than a year earlier and September-November farrowings would be up 0.8%. I'm expecting a bit higher numbers in the September report with summer farrowings up 0.3% and fall farrowings 1.0% larger than last year. My calculations are for winter farrowings to be 1.3% greater than December-February 2006. year.

I believe that pigs per litter this summer increased by a smaller-than-normal 0.4%, due to hot weather, making the June-August pig crop 100.7% of a year ago. Feeder pig imports were up nearly 15% this summer, so the market hog inventory is up more than the pig crop implies.

My estimates of the September 1 market hog inventory by weight groups are: 180 pounds and heavier 102.4%, 120-179 pounds 101.1%, 60-119 pounds 101.0%, and under 60 pounds 101.1% of a year earlier. Hog slaughter since September 1 is up 3.2% compared to the same days last year. Hog slaughter during the next two will need to average 1.25% above year-ago levels to make my 102.4% estimate of the 180 pound plus inventory group correct.

My estimate of the number of hogs in the 60-179 weight groups implies that fourth quarter hog slaughter will be 1% above year-ago levels, assuming the inflow of slaughter hogs from Canada continues close to year-ago levels. I expect live hog prices to average in the mid $40s in the fourth quarter of 2006.

If my estimate of the light weight inventory is correct, first quarter 2007 hog slaughter is also likely to be 1% larger than the number slaughtered in January-February 2006. If so, look for late winter hog prices to average close to $44 on a live basis, $2/cwt higher than the year-earlier price level.

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