US Swine Economics Report

Regular report by Ron Plain on the US Swine industry.
calendar icon 2 January 2007
clock icon 3 minute read
Ron Plain
Ron Plain

All the key numbers in USDA's December hogs and pigs report were close to pre-release trade estimates. So, there were no big surprises. Yet, in one way it was a startling report.

Hog producers are enjoying one of the most profitable periods in U.S. history. Iowa State University calculations indicate November was the 34th consecutive profitable month for the typical Iowa farrow to finish operation, a record. Historically, this should produce forecasts of steady increase in farrowings for the coming year. Yet, trade forecasts predicted, and USDA confirmed, that breeding herd growth is slowing. The breeding herd, which was 1.8% larger than a year earlier on September 1, was up only 1.3% on December 1. Winter farrowings are forecast to be up 2.2% but spring farrowings up only 0.5%.

Everyone's favorite reason for the herd cutback, high feed prices, is a logical one. The cost of corn is double that of a year ago. High feed costs are expected to push cost of production over $50/cwt of live weight next year. Yet, history provides few examples when hog producers have cut production in anticipation of red ink. Hopefully, this herd slowdown is real and will result in farrowings dropping below year-earlier levels in the second half of 2007.

Fourth quarter hog slaughter turned out to be a bit higher than expected. The market hog inventories in USDA's December Hogs and Pigs Report imply that slaughter will be up 1.4% in the first half of 2007.

The 1.4% larger pig crop during September-November 2006 was mostly due to more pigs per litter, up 1.1% compared to a year earlier, than to litters farrowed, up only 0.3%.

A lot of Canadian hogs have been coming south this year. Live hog imports in 2006 are expected to total a record 8.7 million head. Last week, we imported 131,031 feeder pigs, 72,531 barrows and gilts for slaughter, and 214,894 total hogs, all three record numbers for a single week. Canadian hog production and packing are having tough times financially. We expect to continue to see large numbers of hogs and pigs coming south in 2007.

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