US Swine Economics Report

US - On 27 December, USDA will release the results of their latest survey of the US swine inventory, writes Ron Plain in his Swine Economics Report.
calendar icon 22 December 2010
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My estimates are that the breeding herd is 0.3 per cent smaller than a year ago; the market hog inventory is 0.1 per cent larger; and the total herd is 0.1 per cent larger than in December 2009. My estimates of the 1 December market hog inventory by weight groups are: 180 pounds and heavier 102.7 per cent, 120-179 pounds 99.3 per cent, 50-119 pounds 99.1 per cent, and under 50 pounds 100.1 per cent of a year earlier.

Slaughter of barrows and gilts was down 2.1 per cent during September-November. Imports of Canadian hogs for immediate slaughter was up 2.2 per cent, so slaughter of US raised barrows and gilts was down roughly 2.3 per cent during September-November. USDA's September report implied fall slaughter would be down 4.2 per cent. Look for USDA to revise upward the September market hog inventory and their estimate of both sows farrowed and pig crop during last spring (March-May).

In their last inventory report, USDA predicted that September-November farrowings would be 1.2 per cent smaller than a year ago and December-February farrowings would be 0.5 per cent higher than a year earlier. I estimate that fall farrowings were down 1.0 per cent. I am forecasting winter farrowings to be up 0.4 per cent and spring farrowings to be up 0.5 per cent compared to March-May 2010.

September-November sow slaughter was down 9.5 per cent out of a sow herd that was 1.8 per cent smaller compared to 12 months earlier. The drop in sow slaughter is much less when adjusted for the 29 per cent fewer Canadian sows coming south for slaughter during the fall.

I believe pigs per litter were up 1.1 per cent this fall. My estimate is the September-November pig crop was 100.2 per cent of a year earlier. Feeder pig imports during September-November were 6 per cent or so below last fall's level, so the light weight inventory should be up a bit less than the pig crop.

My estimate of hogs in the 50-179 weight groups implies that daily hog slaughter during the first quarter will be roughly 1 per cent below year-ago levels, if the inflow of slaughter hogs from Canada continues at year-earlier levels. There is one extra slaughter day in the first quarter of 2011, so I expect actual slaughter to be 0.8 per cent above the year-ago level. I expect daily hog slaughter during the second quarter of 2011 to be 0.4 per cent lower than the number slaughtered in April-June 2010. I expect live hog prices to average close to $54/cwt ($71/cwt carcass) in the first quarter of 2011 and $61/cwt ($81/cwt carcass) in the second quarter next year. The futures market is more optimistic.

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