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CME: US and Canadian Sow Slaughter

by 5m Editor
29 May 2008, at 10:05am

US - CME's Daily Livestock Report for 28th May 2008.

Our discussion last week about cow slaughter and the source of those animals and your response to it suggested that we needed to present the same information for the U.S. and Canadian sow herds. Canada continues to reduce sow numbers, primarily by shipping them to the U.S. for slaughter. Canadian sow slaughter is down 20% (9,097 head), year-to-date, versus one year ago and Canadian producers now routinely ship between 87 and 91% of total weekly breeding stock culls to the U.S. for processing. The numbers of cull breeding animals coming to the U.S., however, has slowed dramatically in just the past three weeks, presumably because more Canadian culls are either going into or being held for the Canadian breeding herd reduction program which pays far more than market value for those animals. Our sources estimate that about 100,000 Canadian breeding animals have been signed up for the program but the number of those that were entered into the program retroactively (ie. the program pays for animals culled since November as long as the “entire barn” requirement is met) is still not known.

The chart below shows the year-over-year weekly change for U.S. sow slaughter and the number of animals that come from both the U.S. and Canada. Unlike our cow slaughter chart, we did not lag imported animals by one week since most of those move directly to slaughter plants. There is some error in these numbers, too, because the Canadian import data include both sows and boars. We are basically assuming that the proportion of those remains constant from year to year.

E-Livestock Volume 5/28/08 5/27/08 5/21/08
LE (E-Live Cattle): 10,596 11,644 14338
GF (E-Feeder Cattle): 345 241 767
HE (E-Lean Hogs): 7,316 11,987 8631


WEEKLY CHANGE IN TOTAL U.S. SOW
SLAUGHTER

The increase in the slaughter of U.S. sows since March 1 is obvious, as is the recent reduction in the number of sows coming from Canada. The magnitude of these changes is critical. Since January 1, Canadian processors have slaughtered 9,097 head more cull breeding animals while 24,880 more head have come to the U.S. The net of those number is 15,793 head or just over 1% of Canada’s 1.493 million head April 1 breeding herd.

NATIONAL, 500# & UP SOWS,
NEGOTIATED BASE

Just over 68,000 more U.S. sows have been slaughtered, year-to-date, versus 2007. That amounts to about 1.1% of the March 1 U.S. breeding herd inventory of 6.138 million head and roughly the same percentage of last year’s June 1 inventory of 6.116 million head. Gilt slaughter data gathered by the University of Missouri show that gilts have accounted for 49.9% of total barrow and gilt slaughter thus far in 2008 versus 49.3% last year. A gilt slaughter rate of 49.4 to 49.5% suggests a stable breeding herd, so these data support the conclusion that sow numbers are falling as well.

And what about that noticeable lull in sow slaughter the first week of May? Some thought the reduction was due to producers’ seeing higher prices and concluding that good times were here again. While some may believe that lower prices and significant losses are behind us, the better explanation, we think, is that producers saw stronger butcher hog prices and decided that sow prices were likely to rise. The bottom graph shows that they were correct in spades! Heavy sow prices have risen nearly $10/cwt since the first week of May, adding $50-$60 per head to the value of cull sows. That kind of increase will even pay for a few weeks of very expensive feed! We think the recovery of U.S. sow slaughter the week of May 10 confirms our thoughts.

5m Editor