US Swine Economics Report

by 5m Editor
1 October 2008, at 8:45am

US - USDA’s latest survey of the U.S. swine herd found lots of hogs. At 102.5% of September 2007’s level, the market herd on September 1 was the largest ever for any quarterly survey, says Ron Plain in his latest Swine Economics Report.

The same was true for the total inventory of hogs and pigs, which was up 2.0% from last year. USDA said the breeding herd was down 2.6% on September 1. All these numbers were very close to the average of trade forecasts.

USDA made no big changes in their previous estimates of market hog inventories, but revised upward some of their earlier estimates of the breeding herd inventory. The September and December 2007 breeding herd inventories were increased by 60,000 head (1.0%) each and the March and June breeding inventories were increased by 50,000 head (0.8%) each.

Pigs per litter in the June-August quarter averaged a record 9.51 head, up an amazing 2.4% compared to a year earlier and the 20th consecutive quarter above year-ago levels.

USDA said the inventory of market hogs weighing 120-179 pounds was up 6.1% on September 1 and the inventory of market hogs weighing 60-119 pounds was up 1.1%. If these numbers are right, daily hog slaughter during the fourth quarter should average up 2%, assuming continued reduction in slaughter hog imports from Canada. If so, look for October-December carcass hog prices to average in the low $60s.

USDA said the inventory of market hogs weighing less than 60 pounds was down 0.3% on September 1, implying daily hog slaughter during the first quarter of 2009 will be down 1-2% with fewer Canadian hogs. I expect first quarter carcass hog prices to average in the upper $60s.

USDA forecast September-November farrowings to be down 5.5% and December-February farrowings to be down 2.9%. If, as expected, pigs per litter keep increasing, then the pig crop won’t be down as much as farrowings. I expect 2009 hog slaughter will be down about 3% and carcass hog prices in 2009 will average close to $74/cwt. Unfortunately, the cost of production could average close to $79/cwt on a carcass basis, resulting in a loss of $5/cwt or roughly $10 per head.

5m Editor