Statistics Canada’s quarterly Hog Statistics report for October contained some large downward revisions for Canada’s swine breeding herd and pegs the October herd at only 1.416 million head, 8.3% smaller than last year. The chart below shows year-on-year comparisons for the U.S., Canadian and combined Canada-U.S. breeding herd. Stats Canada’s original breeding herd change estimates for 2008 are indicated by the X’s in the chart. Recall that we (as well as most other analysts) had viewed the July estimate with extreme skepticism in light of the severe economic conditions north of the border for the past three years and the government- sponsored buyout program that was ongoing at that time. It appears that our skepticism is confirmed by this report. The October reduction leaves the combined Canada-U.S. herd 3.7% smaller than one year ago.

Not surprisingly, Canada’s total pig numbers continue to decline as well. The inventory of all market pigs was pegged at 11.379 million head, 11.2% smaller than one year ago. The largest decline was, as usual, in the number of pigs weighing 20kg (44 lbs.) or less. Those stocks were 18.9% lower than one year ago. Inventories of pigs weighing more than 20 kg fell by less than 10%. These changes reflect the continued growth for weaned/ feeder pig exports to the U.S. while exports of market hogs have fallen sharply since March.

USDA’s revisions to the October 10 Crop Production and World Agriculture Supply and Demand Estimates (WASDE) reports primarily involved changes in acreage estimates which ultimately reduced forecasts for 2008 crop sizes and projected year-end carryout stocks. Revised supply and usage tables for both corn and soybeans appear on page 2 of the link below. CME Group corn futures were 5.5 to 8.5 cents/bushel higher on the forecast for a smaller crop and carryout. Soybean futures were 4 to 14 cents/bushel LOWER on the smaller forecasted crop and carryout. Most of the speculation on Monday after USDA announced that they would release a revision to the October 10 report was that the soybean acreage number would be substantially reduced. It had been a bit of a surprise in the original report but the reduction was apparently smaller than the trade expected.

USDA reduced food and residual as well as export forecasts for corn. The lower crop, though, more than offset these usage reductions and projected 2009 carryout now stands at 1.088 billion bushels, 33% lower than this year’s projected carryout. USDA raised its forecast price range from $4.20-$5.20/bu. to $4.25-$5.25/bu.

USDA’s lower forecast soybean crop led them to reduce forecast crushing by 30 million bushels but leave all other usage categories unchanged. The net impact of the acreage and usage changes is to reduce carryout stocks to 205 million bu., unchanged from last year. USDA raised its forecast soybean price range by 10 cents on both ends but did not change the forecast price ranges for either bean oil or meal — lading to the curious “higher bean price, lower bean product price” relationship that we discussed after the original report was released.

Further Reading

-

You can view the full report by clicking here.

-

Go to our previous news item on this story by clicking here.