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US Swine Economics Report

21 December 2011, at 8:38am

US - On 23 December, the USDA will release the results of its latest survey of the US swine inventory. Hog producers enjoyed record hog prices this summer and I believe that has caused some modest herd expansion, writes Ron Plain in his latest Swine Economics Report.

My estimates are that the breeding herd is 0.8 per cent larger than a year ago; the market hog inventory is 1.4 per cent larger; and the total herd is 1.4 per cent larger than in December 2010. My estimates of the 1 December market hog inventory by weight groups are: 180 pounds and heavier 102 per cent, 120-179 pounds 101.3 per cent, 50-119 pounds 101 per cent, and under 50 pounds 101.6 per cent of a year earlier.

September-November sow slaughter was up 4.2 per cent. Imports of Canadian sows for slaughter during this period were up 8.4 per cent. Thus, net slaughter of US sows was up 3.5 per cent out of a sow herd that was 0.6 per cent larger compared to 12 months earlier.

Slaughter of barrows and gilts during September-November was up two per cent with a year earlier. USDA's September report implied summer slaughter would be up 2.1 per cent. There appears little need for USDA to make any large changes in their September market hog inventory or their estimate of sows farrowed and pig crop during March-May.

In their last inventory report, USDA predicted that September-November farrowings would be down 0.2 per cent and December-February farrowings would be 0.5 per cent higher than a year earlier. There is a good chance that hot weather last summer slightly reduced the size of the winter pig crop. I believe fall farrowings actually were down 0.5 per cent. I'm forecasting winter farrowings to be unchanged and March-May farrowings up 0.5 per cent compared to last spring.

I believe pigs per litter were up two per cent this fall. My estimate is the September-November pig crop was 101.6 per cent of a year earlier.

My estimate of hogs in the 50-179 weight groups implies that daily hog slaughter during the first quarter will be one per cent to 1.5 per cent above year-ago levels, if the inflow of slaughter hogs from Canada is close to year-earlier levels. I expect hog slaughter during the second quarter of 2012 to be 1.5 per cent higher than the number slaughtered in April-June 2011. Look for third quarter slaughter to be up 1.7 per cent and fourth quarter slaughter up two per cent on a daily basis.

I expect live hog prices to average close to $64/cwt ($85/cwt carcase) in the first quarter of 2012; $69/cwt ($91/cwt carcase) in the second and third quarters of 2012; and $58/cwt ($77/cwt carcase) in the fourth quarter of 2012.