US Swine Economics Report

by 5m Editor
22 December 2008, at 5:33am

US - On 30 December, USDA will release the results of their latest survey of the US swine inventory, writes Ron Plain in his Swine Economics Report.

My calculations indicate the breeding herd is 3.0 per cent smaller than a year ago, the market hog inventory is 2.5 per cent smaller, and the total herd is 2.6 per cent smaller than on 1 December, 2007.

USDA is expected to make some downward revisions in their previous estimates since hog slaughter during September-November was 4 per cent lower than expected based on the September inventory report. Half of the reduction was due to a 56 per cent drop in imports of Canadian slaughter hogs. The other half appears to be due to fewer US raised hogs.

In their last inventory report, USDA predicted September-November farrowings would be 5.5 per cent smaller than a year earlier and December-February farrowings would be down 2.9 per cent. I'm going with fall farrowings down 5.0 per cent and winter farrowings down 3.0 per cent. I'm forecasting spring farrowings to be down 3.0 per cent compared to March-May 2008. Record feed prices have caused the financial losses that are driving this cut back. Through November, sow slaughter was 6.4 per cent higher than a year ago.

I'm estimating that pigs per litter were up 1.5 per cent this fall, making the September-November pig crop 96.5 per cent of a year ago. Feeder pig imports this fall were below last year's level, so the light weight market hog inventory should be down more than the fall pig crop.

My estimates of the 1 December market hog inventory by weight groups are: 180 pounds and heavier 99.5 per cent, 120-179 pounds 98.5 per cent, 60-119 pounds 97.5 per cent, and under 60 pounds 95.8 per cent of a year earlier.

My estimate of hogs in the 60-179 weight groups implies that first quarter daily hog slaughter will be more than 2 per cent below year-ago levels, if the inflow of slaughter hogs from Canada continues to be down. I expect live hog prices to average close to $46/cwt ($60/cwt carcass) in the first quarter of 2009.

I expect hog slaughter during the second quarter of 2009 to be 5 per cent lower than the number slaughtered in April-June 2008. If so, look for second quarter 2009 hog prices to average close to $55/cwt on a live basis and $72.50/cwt on a carcass basis.