March 2011 Hog and Pig Report Summary

by 5m Editor
31 March 2011, at 11:59am

US - March swine inventories came in slightly higher than a year ago, as expected by analysts, writes Shane Ellis.

Total swine numbers were up 0.6 per cent to nearly 64 million head. The sow herd is almost 5.8 million head up half a per cent from a year ago. Market hog numbers are up 0.6 per cent at 58.2 million head with heavy pigs on feed steady with year ago. Weaned and feeder pig numbers were up 0.7 per cent and 50-119 pound pigs were up 1.55 per cent from a year ago. The pig crop in the final quarter of 2010 was down almost half a per cent, while the first quarter 2011pig crop was up 1.4 per cent. Farrowing intentions in the next two quarters are down 2.6 per cent. Litter size was up 1.4 per cent from a year ago, as the industry continues to increase pigs-per-sow efficiency. Table 1 contains the summary of the hog and pig report for both national and Iowa numbers.

Nationally, producers have cautiously expanded the sow herd from a year ago, however there is a notable drop in farrowing intentions for the second and third quarter. While many factors impact production level decisions, a potentially tight to negative profit margin for hogs being marketed in the in fall of 2011 are draining the incentive to expand the industry’s productive capacity. If farrowing intentions are down 2.6 per cent in the next two quarters then hog numbers may be down about 1 per cent by the fall of 2011. For now market hog supplies are likely to be steady going through the spring but will be up from last year by June.

Iowa’s total swine inventory is up more than a per cent from last year with sow and market hog numbers up 2 and 1 per cent respectively. Pig placements in the state have been up in the past month, so again, the state will be offering more market ready hogs by June. Farrowing intentions in Iowa over the next six months are up more than 2 per cent from a year ago. If this is called an expansion for the state’s farrowing production, it may be more of an expansion into existing under used capacity. First quarter Iowa pig crop was up nearly 5 per cent from a year ago, an increase very near expectations from even six months ago.

With no dramatic changes or surprises from this report, it is not likely to impact the market. What is the impacting the hog market is the uncertainty of how natural disasters and economic instability will impact total pork demand. The futures market made some dramatic price shifts after the tragic earth quake and tsunami in Japan, our largest foreign market for pork. It is still uncertain how the Japanese domestic food supply and demand will be impacted by the natural disaster and damaged nuclear plant crisis. After the disaster, futures prices declined significantly and then had recovered by the next week as the markets determined that demand was not significantly impacted. Another factor impacting prices is the effect increasing food and fuel prices will have on domestic consumer demand and economic recovery. For now, demand has remained solid despite the average retail price of pork being more than 10 per cent higher than a year ago. Hog prices are up 15 per cent from year ago. Pork exports grew 3 per cent last year, after export grown in recent years has been closer to 8 per cent. Exports are expected to grow at a similar pace to last year.

Pork supplies are expected to be steady to slightly higher from last year. Table 2 contains the expected change in pork supply and price forecasts for the next four quarters. Hog numbers will be steady in the next quarter but lean hog dressed weights are up more than 2 per cent. Increased weights will offset part or most of increased exports, leaving a similar supply of pork for the domestic market as seen last year. In the third quarter hog supplies will begin to increase, and fourth quarter hog supplies will be down from last year’s “new-corn-surprise“ wave of fast growing heavy weight hogs.

Futures prices for lean hogs broke the $100/cwt, which is good news as corn and feed prices remain high. Part of the higher prices is inflationary price action, but even with this taken into account in the ISU forecasting model, the futures market price adjusted for an Iowa basis is still offering a slightly higher price.

Further Reading

- You can view the USDA Quarterly Hogs and Pigs Report - March 2011 by clicking here.