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US Swine Economics Report

by 5m Editor
20 December 2006, at 1:19pm

Regular report by Ron Plain on the US Swine industry.

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On December 27, USDA will release the results of their latest survey of the U.S. hog inventory. My calculations indicate the breeding herd is 1.0% larger than a year ago and the market hog inventory is 1.1% larger than on December 1, 2006. These are very small increases given hog producers have experienced 34 consecutive profitable months. I believe the huge run up in corn prices this fall has brought breeding herd growth to a stop. U.S. sow slaughter during September-November was up 4.1% compared to last fall, despite slightly fewer sows being imported for slaughter from Canada compared to the same months of 2005.

In the last Hogs and Pigs Report, USDA predicted September-November farrowings would be 0.9% larger than a year earlier and December-February farrowings would be up 2.2%. I'm expecting slightly lower numbers in this report with fall farrowings up 0.8% and winter farrowings 2.1% larger than last year. My forecast is spring farrowings will be equal to the number farrowed in March-May 2006.

I believe that pigs per litter this fall increased by 0.7%, making the September-November pig crop 101.5% of a year ago. Feeder pig imports from Canada were up 11% this fall, so the light weight market hog inventory could be up a bit more than the pig crop implies.

My estimates of the December 1 market hog inventory by weight groups are: 180 pounds and heavier 100.2%, 120-179 pounds 101.0%, 60-119 pounds 101.2%, and under 60 pounds 101.5% of a year earlier. Hog slaughter since December 1 is down compared to the same days last year. Hog slaughter during the next 2-3 weeks will need to average 1.1% above year-ago levels to make my estimate of the 180 pound plus inventory group correct.

My estimate of the number of hogs in the 60-179 weight groups implies that first quarter hog slaughter will be 1.1% 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 first quarter of 2006.

If my estimate of the light weight inventory is correct, second quarter 2007 hog slaughter should be 1.5% larger than the number slaughtered in April-June 2006. If so, look for spring hog prices to average close to $48 on a live basis, down only slightly from a year earlier.

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