US Swine Economics Report

by 5m Editor
23 June 2008, at 11:32am

US - On June 27 USDA will release the results of their latest survey of the U.S. swine inventory, reports Ron Plain in his Swine Economics Report.

My calculations indicate the breeding herd is 2.0% smaller than a year ago, but the market hog inventory is 6.2% larger, and the total herd is 5.4% bigger than on June 1, 2007.

USDA will make upward revisions in their previous estimates. Hog slaughter during March-May was 2% higher than expected based on the March inventory report. A 15% decrease in slaughter hog imports from Canada exacerbated the difference. Spring slaughter of U.S. raised hogs was 2.6% higher than the March report implied. The new circovirus vaccine is reducing death loss which may explain most of the increased slaughter.

In their last inventory report, USDA predicted March-May farrowings would be 0.5% larger than a year earlier and June–August farrowings would be down 2.5%. I think spring farrowings were actually up 2.5% and I believe summer farrowings will be only 1.0% smaller than last year. I’m forecasting fall farrowings to be down 3.0% compared to September-November 2007. Corn prices are astronomical causing hog producers to lose lots of money. Spring sow slaughter was 10% higher than a year ago.

I’m estimating pigs per litter were up 1.1% this spring, making the March-May pig crop 103.6% of a year ago. Feeder pig imports from Canada were up 14.7% 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 108.5%, 120-179 pounds 108.0%, 60-119 pounds 107.0%, and under 60 pounds 103.7% of a year earlier.

My estimate of hogs in the 60-179 weight groups implies that third quarter hog slaughter will be 7% or so above year-ago levels, if the inflow of slaughter hogs from Canada continues to be below year-ago levels. I expect live hog prices to average close to $52/cwt in the third quarter of 2008.

I expect fourth quarter 2008 hog slaughter to be nearly 3% larger than the number slaughtered in October-December 2007. If so, look for fourth quarter 2008 hog prices to average close to $46/cwt on a live basis.

5m Editor