Below our observations:

• It appears the USDA sow inventory is basically the same after 12 months of mostly financial losses for the industry. The staying power of producers that this reflects is amazing. To be consistent we don’t believe this number. Our observations tell us the breeding herd declined over the last twelve months. Too many producers cut back their breeding herd or quit relative to any expansion to have a sow inventory that did not decline. We could be and maybe are wrong but it’s what we believe. If we held sow inventory it will be first time in swine history when sow inventory did not decline with hog to corn ratio consistently under 15 to 1.
• Market Inventory is showing 1 per cent more in the under 120 lb. category which will be hogs coming to market in May or later. We expect when hog supply declines to almost year over year levels coupled with normal seasonal decline, lean hog prices will push closes to $1.00 lean a lb.

USDA data shows the continuation of productivity increases in our industry. Bigger litters better farrowing rate leading to a bigger pig crop. We expect this trend to continue as we all push towards more efficiency due to the need to financially survive.

There is no doubt hog producers are hanging on the hope and optimism to get to cheaper feed. The USDA’s release a couple weeks ago of larger than expected corn inventory took almost $1.00 a bushel of nearby corn. Dropping the cost to produce a market hog about $10.00 per head. Anyone who is engaged in the industry knows the South American corn and soybean crop is a record. The USDA projects US corn average plantings at the highest in eighty years. Almost everyone knows the US has never had two severe droughts in a row. There are market guru’s in Chicago taking corn at $3.50 a bushel if the crop comes in as projected of 14 billion bushels plus. To some extent we don’t have a hog market we a have a grain market. For many then, live and fortunes are tied to the global supply and price of feed products. The hog supply of 1 per cent either way pales to a corn crop that could vary 30 per cent in supply? Swine cost of production due to feed could reasonably move $30-40 per head. A 1 per cent change in hogs is almost irrelevant. Our lives are tied to feed cost. Pray for rain.

Further Reading

You can view the USDA Hogs and Pigs report by clicking here.