Pork Commentary: Bullish Hogs and Pigs Report

US - Last Friday the US swine industry received the USDA June 1st 'Hogs and Pigs' Report. Bottom line: three million fewer pigs in the inventory year-over-year and a breeding herd smaller than a year ago, writes Jim Long.
calendar icon 1 July 2014
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This all but guarantees farrow to finish profit margins for the next year of over $60 per head - the very best 12 months in the history of the US hog industry.

Our Observations

Despite record per hog profits in the last three months, the US breeding herd has not expanded. June 1st breeding inventory was 4,000 head higher than on March 1st and 29,000 lower than a year ago. Treading water. We believe PED challenges and the need to replenish lost equity has been a damper on expansion. We expect to see sow herd expansion beginning in the fall of 2014.

There is no doubt PED has had a major effect on mortality. The three million fewer market hogs in inventory are directly attributable to the PED mortality. In the coming half a year, we expect at least 100,000 fewer market hogs a week year-over-year. The current strength in lean hog futures through the fall and early winter are sustainable with upside at the production levels.

The market inventory of under 50 pound pigs on June 1st of six per cent fewer year-over-year clearly indicates PED had not slowed down in April–May time frame when the June 1st inventory under 50-pound pigs were born. If PED continues at that level through the summer and fall, summer 2015 market hog prices will be the same or higher as this year. The bizarre reality is PED has made the US swine industry massive levels of profit by restricting hog supply.

Pigs per litter for the six months December-May: this year, 9.65; last year, 10.19. That’s a half pig per litter, and the PED effect.

Market experts - whatever that means - expected a significant increase in the breeding herd. We didn’t think there was. In our previous report, we wrote that next to no new sow buildings were being built. We don’t believe we can get significant expansion without new sow buildings. We sell breeding stock it’s our business to find new barns and existing empty sow barns being restocked. We are stocking two empty barns currently, a total of 6,000 sows. We know of three other empty sow units being restocked by competitors currently. It’s happening but these are in both US and Canada and in the big picture not a lot breeding animals in the total inventory.


No expansion, three million less market hogs. Throw in six per cent less US beef and the red meat sector is restricting supply. We expect hog prices to reflect margins of over $60 per head average for the next 12 months.

In the first week of January, we called 2014 – The Year of the Pig Farmer. Looks like The Year of the Pig Farmer is not only 2014 but half of 2015. Pay some bills, put some money away - we all know that there is a huge cycle.

Further Reading

You can view the full 'Hogs & Pigs' report by clicking here.

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