Many other commentaries regarding the latest hogs and pigs report have noted the lack of surprise in this report relative to the expected numbers. While there are no signs of expansion in the breeding herd numbers, the continued improvements in breeding herd productivity are resulting in a smaller decline in the kept for market category than most observers are used to seeing.

Pigs per litter for the 1 March through 31 May period averaged 9.81, the highest on record. The number of pigs weaned per litter has been growing at 0.01 pigs/month since January 2002, with the productivity increase mostly above the trend line for the past 2 years. This productivity increase in the US breeding herd has partially offset the decline in Canadian feeder pig imports. There were 5 states that weaned over 10 pigs per litter for the 3 month period – Minnesota, 10.15; Missouri, 10.05; Nebraska, 10.15; South Dakota, 10.30 and Utah, 10.00. South Dakota producers have had the highest or second highest pigs per litter for the past 2 years.

Canada will release the results of their 1 July inventory in mid-August. When the 1 March USDA and 1 April Stats Canada numbers were combined, the estimated North American inventory of market pigs was 68.389 million head. This was down 7.833 million pigs from the inventory peak on December, 2007 and January, 2008. All expectations are that there will be further decline in this number as the results of the Canadian sow buy-out work their way thru their production systems. It is expected that the combined North American breeding herd inventory will be very close to 7 million head.

In the US, the biggest relative declines in breeding herd inventories this past year were in North Carolina and Texas. In North Carolina, a large part of the decline was due to the bankruptcy declaration of 2 production systems, while the Texas decline was almost all due to the closure by Smithfield of their Premium Standard production sites. Based on my conversations with producers, lenders and other allied industry, a majority of the decline in the breeding over the past 2 years elsewhere was due to a careful weeding out of under producing females in herds, rather than closures of production facilities. This weeding out of under producing females explains in part the dramatic increase in the reproductive performance of the US breeding herd.

In North Carolina, the breeding herd of 880,000 head is the lowest 1 June inventory since 1 June 1995, when there were 840,000 breeding animals in North Carolina. The 1 June kept for market number of 8.2 million pigs was the smallest 1 June number since 1996. North Carolina now has 13.8 per cent of the US hogs and pigs inventory, their smallest share since a 13.4 per cent share on 1 September 1995.

On the other hand, the Illinois breeding herd inventory of 490,000 head was the largest 1 June number since 1998. That state now has 8.3 per cent of the US breeding herd, their highest per centage of the breeding herd since 1 June 1998.

Minnesota continues to grow in their share of the kept for market category with 11.9 per cent of the US number in the latest report.

Producer’s optimism about the potential for profit in coming months is reflected in the prices they are currently paying for weaned pigs and 40 pound pigs. Historically, SEW pig prices drop $8.50 per head from late December to late summer. So far this year, the weighted average price reported by USDA has remained within $4 of the January high price. Further proof of producer optimism is the fact that last week, the spot cash market for SEW pigs was $7.30 per pig higher than the average contract price, which is mostly based on formulas linked to the 5 month futures contract.

Finally, the continued heavy live weights being delivered to slaughter plants by producers in the Iowa and Southern Minnesota region reflect the continued decline in feed costs. The USDA Minnesota Ethanol Plant report for this morning (29 June) reported cash corn bids in Minnesota ranging from $2.80 to $3.09 per bushel with DDGS prices ranging from $87 to $95 per ton.