US Swine Economics Report

by 5m Editor
22 June 2011, at 9:49am

US - On 24 June, USDA will release the results of their latest survey of the US swine inventory. Hog producers are earning modest profits, but I think there is too much feed price uncertainty for herd expansion to be occurring, writes Ron Plain in his Swine Economics Report.

My estimates are that the breeding herd is 0.7 per cent smaller than a year ago; the market hog inventory is 0.1 per cent smaller; and the total herd is 0.2 per cent smaller than in June 2010. My estimates of the 1 June market hog inventory by weight groups are: 180 pounds and heavier 99.9 per cent, 120-179 pounds 100.7 per cent, 50-119 pounds 100.0 per cent, and under 50 pounds 99.2 per cent of a year earlier.

Slaughter of barrows and gilts during March-May was even with a year earlier. Imports of Canadian barrows and gilts for immediate slaughter was up only a fraction of 1 per cent from a year earlier, so slaughter of US raised barrows and gilts also was unchanged compared to March-May 2010. USDA's March report implied spring slaughter would be up a mere 0.2 per cent. So, there appears no need for USDA to revise the March market hog inventory or their estimate of sows farrowed or pig crop during September-November.

In their last inventory report, USDA predicted that both March-May farrowings and June-August farrowings would be 2.6 per cent lower than a year earlier. I agree. I am forecasting fall farrowings to be down 1.9 per cent compared to September-November 2010. March-May sow slaughter was down 0.5 per cent. Imports of Canadian sows for slaughter during this period were down 15 per cent. Thus, net slaughter of US sows was up 2.4 per cent out of a sow herd that was 0.5 per cent larger compared to 12 months earlier. This implies a slight reduction in the sow herd, assuming gilt retention held steady.

I believe pigs per litter were up 1.8 per cent this spring. My estimate is the March-May pig crop was 99.2 per cent of a year earlier. Feeder pig imports during March-May were 2.2 per cent above last spring's level, so the light weight inventory should be up a tiny bit more than the pig crop.

My estimate of hogs in the 50-179 weight groups implies that daily hog slaughter during the third quarter will be roughly 0.3 per cent above year-ago levels, if the inflow of slaughter hogs from Canada is close to year-earlier levels. I expect daily hog slaughter during the fourth quarter of 2011 to be 1 per cent lower than the number slaughtered in October-December 2010. I expect live hog prices to average close to $67/cwt ($89/cwt carcass) in the third quarter of 2011 and $60/cwt ($79/cwt carcass) in the fourth quarter. The futures market is more optimistic.