The US inventory on September 1 was 68.4 million, up 4 per cent from a year ago and a record high. Congratulations all! We have hit a new plateau in supply and we obviously must be confident that there will be markets for the pork.

The US breeding inventory was up to 5.99 million or 1 per cent from a year ago. Not exactly a huge increase compared to what some pundits thought was going to be rampant sow herd expansion.

Certainly the 4 per cent more pigs didn’t come from significantly more sows but mostly from record June – August litter size of 10.39 compared to 10.16 a year ago. Two things here, PED has mostly disappeared which has helped pigs stay alive resulting in better litter size; but the other component is litter size improvement by swine genetic companies. At Genesus our genetic trend line improvement for litter size is .22 per litter per year. As the swine genetic industry continues to consolidate and the survivors work to get better, the litter size improvement is a reality now and in the future.

The June – August Pig Crop was 30.6 million only up 1 per cent from last year, while the number of sows farrowed in the period of 2.94 million was down 2 per cent .

The Pig Crop up only 1 per cent is why the pressure isn’t great on finishing or shackle space. The Pig Crop increase of 1 per cent June – August means more hogs to market late 2015, and the first part of 2016 will be quite similar to a year prior. The small increase in the Pig Crop to us is somewhat surprising and more bullish than we expected.

We are not sure that expected farrowings are an accurate barometer but this quarter Sept – Nov US producers expect to farrow 2 per cent less and Dec – Feb 1 per cent fewer.

If this comes to fruition next summer and fall hog supply will be similar to this year. Which in our opinion is more positive for markets than we were prepared for.

Summary

Hog and Pig numbers are manageable. Sow herd expansion has not been significant. Pig Crop and expected farrowings indicate US hog numbers in 2016 will be similar to 2015. The lack of expansion indicates to us despite record profits in 2014 our industry is not bullish about the future. You need capital and courage to expand. The number of producers with capital and courage remains limited.