CME: Hogs, Pigs Inventory up on Previous Year

27 April 2012, at 12:49pm

CANADA - Statistics Canada has released the results of its quarterly survey of Canadian hog and pig operations. Some of the highlights of the survey and implications for North American pork production are outlined by Steve Meyer and Len Steiner.

The total inventory of hogs and pigs as of April 1, 2012 was reported at 12.040 million head, 210,000 head or 1.8% higher than the previous year but still some 21% smaller than then inventory peak in September 2005. The growth in Canadian inventories mirrored the increases in the US market, with the US inventory up 1.9% in the last quarter. Combined US and Canadian hog supplies were 76.912 million head, 1.9% higher than a year ago. At its peak, the Canadian hog industry contributed about 20.0% to North American supplies but that share has drifted to about 15.7% as of last count.

The Canadian sow inventory has been remarkably steady in recent quarters despite higher prices for North American pork. This is partly due to sharply higher feed costs last year that sapped the incentives to expand but also limited processing capacity. Even though Canadian producers receive some benefits from the exchange rate in purchasing feed from the US, the stronger Loonie becomes a liability when it comes to shipping feeder pigs to the US. The Canadian breeding stock as of April 1 was pegged at 1.310 million head, slightly lower than the previous quarter and within a few hundred head of last year’s levels. The Canadian breeding herd contracted by about 20% between 2005 and 2009 and it has held at those levels ever since (see chart). The North American sow inventory is currently estimated at 7.130 million head, just 32,000 head or 0.5% higher than what it was last March.

As in the US, much of the increase in pork supplies in Canada is not coming from herd expansion but from productivity gains. The survey pegged sow farrowings in Q1 of 2012 at 709,100 head, up 0.2% from the previous year. The pig crop for the quarter was reported at 7.265 million head, up 0.9% higher than the previous year. The size of the pig crop vs. farrowings implies 10.25 pigs per litter in the latest reported quarter, 0.7% higher than the previous year. The growth in pigs per litter in Canada has lagged behind the US, where pigs per litter are growing at near 2%. The far rowing size for the latest quarter was notably lower than what producer intentions indicated in the January survey. The survey also pared back intentions for Q2. In January, Canadian producers expected Apr - Jun farrowings to increase by 6.6% but this latest survey now expects farrowings to increase only 2.3% from a year ago and farrowings for Jul - Sep are expected to decline 1.2%. Even with steady growth in the number of pigs per litter, this implies that the pig crop in Canada in Q3, and likely in Q4, will be lower than in 2011.