US Swine Economics Report

My estimates are that the breeding herd is 3.7 per cent smaller than a year ago; the market hog inventory is 3.3 per cent smaller; and the total herd is 3.4 per cent smaller than in June 2009. My estimates of the June 1 market hog inventory by weight groups are: 180 pounds and heavier 97.2 per cent, 120-179 pounds 96.0 per cent, 50-119 pounds 96.5 per cent, and under 50 pounds 96.9 per cent of a year earlier.

Slaughter of barrows and gilts was down 1.7 per cent during March-May as was slaughter of US raised barrows and gilts. After being below year-earlier for 8 consecutive quarters, imports of Canadian hogs for slaughter during March-May 2010 were even with year ago. Slaughter of US raised barrows and gilts was equal to that implied by the March inventory report. I am not expecting any major changes by USDA in their March market hog inventory estimate.

In their last inventory report, USDA predicted that March-May farrowings would be 4.0 per cent smaller than a year ago and June-August farrowings would be 2.4 per cent lower than a year earlier. I agree that spring farrowings were down 4.0 per cent. I am forecasting summer farrowings will be down 3.0 per cent and fall farrowings to be down 2.0 per cent compared to September-November 2009.

December-February sow slaughter was down 2.3 per cent and March-May was down 3.0 per cent compared to 12 months earlier. The decline was even smaller when adjusted for the number of Canadian sows coming south for slaughter.

I believe pigs per litter were up 1.2 per cent this spring. My estimate is the March-May pig crop was 97.2 per cent of a year earlier. Feeder pig imports during March-May were 18.6 per cent below last spring's level, so the light weight inventory should be down more than the pig crop.

My estimate of hogs in the 50-179 weight groups implies that third quarter hog slaughter will be roughly 3.7 per cent below year-ago levels, if the inflow of slaughter hogs from Canada continues at year-earlier levels. I expect hog slaughter during the fourth quarter of 2010 to be 3.0 per cent lower than the number slaughtered in October-December 2009. I expect live hog prices to average close to $58/cwt ($77/cwt carcass) in the third quarter of 2010 and $52/cwt ($68/cwt carcass) in the fourth quarter.