US Swine Economics Report

by 5m Editor
26 June 2007, at 10:19am

Regular report by Ron Plain on the US Swine industry.

On Friday, USDA will release the results of their latest survey of the U.S. swine inventory. My calculations indicate the breeding herd is 0.9% larger than a year ago, the market hog inventory is 2.4% larger, and the total herd is 2.3% bigger than on June 1, 2006.

I expect USDA will make some upward revisions in some of their previous estimates. Hog slaughter during March-May was roughly 1.8% higher than expected based on the March inventory report. Some of this increase may be due to lower death loss and faster gains, but I expect most was due to more litters farrowed than previously estimated.

In the March Hogs and Pigs Report, USDA predicted March-May farrowings would be 0.5% smaller than a year earlier and June-August farrowings would be up 0.2%. I'm estimating that spring farrowings were actually up 1.2% and summer farrowings will be 1.0% larger than last year. My forecast is that fall farrowings will be up 0.8% compared to September-November 2006.

Despite profits during the last 3 years, sow slaughter has been running above year-ago levels, due in part, to the dramatic increase in corn prices.

I'm estimating that pigs per litter this spring were up 0.7%, making the March-May pig crop 101.9% of a year ago. Feeder pig imports from Canada were up 10% this spring, so the light weight market hog inventory should be up a bit more than the pig crop implies.

My estimates of the June 1 market hog inventory by weight groups are: 180 pounds and heavier 103.8%, 120-179 pounds 102.3%, 60-119 pounds 102.2%, and under 60 pounds 102.0% of a year earlier. Hog slaughter the last two weeks have been up 4% compared to the same period last year.

My estimate of the number of hogs in the 60-179 weight groups implies that third quarter hog slaughter will be 2.3% above year-ago levels, or a bit higher if the inflow of slaughter hogs from Canada continues running above year-ago levels. I expect live hog prices to average close to $50/cwt in the third quarter of 2007.

If my estimate of the light weight inventory is correct, fourth quarter 2007 hog slaughter should be a little over 2% larger than the number slaughtered in October-December 2006. If so, look for fourth quarter 2007 hog prices to average close to $44/cwt on a live basis, unchanged from a year earlier.

5m Editor