Swine Economics Report

US - On Friday, USDA will release the results of their latest survey of the U.S. swine inventory. My calculations indicate the breeding herd is 0.5% larger than a year ago, the market hog inventory is 3.0% larger, and the total herd is 2.8% bigger than on September 1, 2006.
calendar icon 28 September 2007
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I expect USDA will make some upward revisions in their previous estimates. Hog slaughter during June-August was roughly 1.2% higher than expected based on the June inventory report. Half of the difference was due to increased imports of slaughter hogs from Canada (up 27.7%). Slaughter of U.S. raised hogs was 0.6% higher than the June report implied. Either more pigs were born or fewer died than expected.

In their last inventory report, USDA predicted June-August farrowings would be 1.6% larger than a year earlier and September-November farrowings would be up 0.4%. I'm in agreement on summer farrowings but think fall farrowings will be 0.8% larger than last year. My forecast is that winter farrowings will be up 0.4% compared to December-February 2007. Summer sow slaughter was 1.2% higher than a year ago.

I'm estimating that pigs per litter this summer were up 0.8%, making the June-August pig crop 102.4% of a year ago. Feeder pig imports from Canada were up 4.8% this summer, so the light weight market hog inventory could be up a bit more than the pig crop implies.

My estimates of the September 1 market hog inventory by weight groups are: 180 pounds and heavier 103.8%, 120-179 pounds 103.4%, 60-119 pounds 103.0%, and under 60 pounds 102.5% of a year earlier. Hog slaughter the last three weeks has averaged 3.7% more than the same period last year.

My estimate of the number of hogs in the 60-179 weight groups implies that fourth quarter hog slaughter will be 3.6% or so above year-ago levels, if the inflow of slaughter hogs from Canada continues running above year-ago levels. I expect live hog prices to average close to $44/cwt in the fourth quarter of 2007.

If my estimate of the light weight inventory is correct, first quarter 2008 hog slaughter should be nearly 3% larger than the number slaughtered in January-March 2007. If so, look for first quarter 2008 hog prices to average close to $45/cwt on a live basis.

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