Hog prices were up from lower supplies and strong demand in both domestic and foreign markets. Retraction in the swine industry over the past year was very evident in the past quarter, and the outlook for the rest of the year suggests continued tightening in the pork supplies. The June Hog and Pig Report released June 25, 2010, reports the mid year swine inventories.

The US swine breeding herd now numbers 5.79 million head, down 3.0 per cent from last year. Market hog numbers are down 3.7 per cent to 58.61 million head. Total hog numbers are down 3.6 per cent from a year ago at 64.4 million head. Farrowing intentions are down more than 2 per cent for the next quarter, but are down only a half per cent in the fourth quarter, indicating that sow reduction is leveling off. Third and fourth quarter hog supplies will be down more than 3 per cent. Pig supplies continue to be impacted by the ever increasing size of litters which are 2 per cent larger than a year ago. Table 1 summarizes the recent swine report for national and Iowa inventories.

In Iowa, the reduction in sow numbers has not been as pronounced this year compared to past, with only a 1 per cent reduction in sow numbers. Iowa now has 1 million breeding swine in the state. Iowa farrowing intentions are down 1 per cent for the next two quarters, again indicating that the swine herd reduction is slowing down. The total number of market hogs in the state has decreased nearly 5 per cent from a year ago as fewer feeder pigs are available. The decline in the number of feeder pigs (<60lbs.) placed is rather pronounced at 7 per cent fewer.

Table 2 contains the ISU and futures market forecast for live hog prices in the next four quarters, along with a forecast for domestic pork supplies. The futures market remains very optimistic for lean hog prices for the duration of the summer, and in comparison to a year ago prices are expected to be dramatically higher. Based on the change in hog supplies, meat supplies and demand from a year ago the price forecast modeling at ISU predicts hog prices to be good but below futures market predictions for the quarter. Pork supply will be down a little more than 3 per cent for the rest of the year, but a leveling of in farrowing intentions in the forth quarter suggest that the year over year reduction of the industry may slow to a stall by the second quarter of next year.

Meat demand may be adversely influenced by lackluster economic conditions. While US economic conditions have been mixed to slowly improving in the first half of the year, some analysts are suggesting that any further economic growth will be even slower for the duration of the year. One indicator of the uncertain times ahead is a recent dip in the restaurant performance index fell below 100 again in May. Early spring hopes were that the restaurant industry was recovering along with consumer confidence. Now that confidence is not so certain.

Some of our foreign trade partners have their own economic recessionary issues, which could impact pork exports. Pork exports for the year are up 1-2 per cent from last year. This is a good sign but weaker than initially expected at the beginning of the year. Pork production has been lower but increasing exports is usually a preferred method of removing supply from the domestic market. Lighter supplies are helping support prices, but strong general economic conditions will be needed for a general price improvement.