Breeding Herd

A handful of more sows than last year 1 September with the USDA stating that the breeding herd declined about 70,000 from 1 June to 1 September this year. The breeding herd on 1 September is for all intents and purposes the base for the production of market hogs through next summer. There will be significantly more hogs with no more sows. It’s biologically impossible. Couple that with the PED disease that has hit and its subsequent resulting mortality we cannot comprehend more pigs being produced over the next several months.

Market

The USDA has the same number of market hogs year over year on 1 September. So far year to date the US has marketed one per cent fewer. Of note, 1 March and 1 June, USDA market inventories indicated 100 per cent year over year market inventories. The actual marketings have been lower. The USDA in their 1 September report indicates that over the last 20 reports they have had all Hogs and Pigs estimated 14 of the 20 times as higher than they actually turned out. The USDA estimates that chances are 2 out of 3 that the final estimate will not be above or below the current estimate of 68.4 million by more than 0.8 per cent.

Point is there is little chance we have significantly more hogs coming. Pork demand is strong and with little chance of more hogs we can expect lean hog prices to stay above last year prices. Couple that with the lower feed prices, profitability over the next ten months will be excellent. As we wrote last week, we have had ten weeks of profits! The equity hole that has been created over the last multiple months is huge. We still expect little expansion for months ahead. The industry needs to heal before much of anything happens. There will be talk. Talk is cheap. It takes courage and capital to expand. Not many have both. Expansion won’t happen in a minute.

Further Reading

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