Herd Expansion Could Result in 2016 Hog Excess

CANADA - Anticipated expansion of the US breeding herd combined with reduced losses from PED could result in an excess of hogs coming to market by the middle of next year, writes Bruce Cochrane.
calendar icon 11 May 2015
clock icon 3 minute read

As anticipated the US Department of Agriculture's quarterly Hogs and Pigs Report released in March showed the US breeding herd has grown, although at a slower rate than expected.

Paragon Economics president Dr Steve Meyer observes the report's impact on the market has been negligible but, if we look at the breeding herd and farrowing intentions for the next two quarters, it was a little bullish and was one of the factors that triggered a rise in those deferred contracts and we've seen a steady rise in the futures market and in cash hogs.

Dr Steve Meyer-Paragon Economics:

We think we're going to expand the sow herd some more.

It was up 3.7 per cent in December, 2.2 in March.

We wouldn't be surprised to see that 2 to 3 per cent persist for awhile on year over year numbers but we're also returning to productivity growth.

The 10.17 pigs per litter in March was very close to record high.

In fact the normal seasonal pattern between now and this summer would say the summer litter size will set a new record and so we're off and running on that growth pattern that we had prior to PEDv.

If we have both of those happen we think we could have ample supplies in the second half of 2016 and in fact have enough hogs to cause some problems with slaughter capacity that fourth quarter so we're a little concerned about the numbers.

We have a growing population and a growing world population and perhaps we can get these trade issues solved.

The strong US dollar is negative for export growth though and so that's of a concern as well.
I think the real wild card for the coming year is what happens with PEDv next winter.

Dr Meyer noted we had a pretty good winter this year, and if it's the same next winter, then we would expect very high survival rates and lots of pigs come the second half of 2016.

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