Jim Long Pork Commentary: USDA December 1st Hogs and Pigs Report

The USDA released its December 1st Hogs and Pigs Report last week. No surprise to us there continues to be fewer pigs year over year.
calendar icon 5 January 2022
clock icon 4 minute read


USDA December 1st (x 1000 head)

2019

2020

2021

2021/2020

Kept for breeding

6471

6176

(6276)

6180

100%

Market

71,757

71,136

68,021

96%

Under 50 lbs

22,048

21,989

21,174

96%

50 – 119 lbs

20,638

19,680

19,185

97%

120 – 179 lbs

15,256

15,791

14,809

94%

180 lbs and over

13,816

13,675

12,853

94%

The interesting thing about the USDA numbers is their continual revision in prior quarters down. Example, December 1st 2020 Breeding Herd reported December 2020 at 6.276 million, December 1st 2021 the 2020 December 1 Breeding Herd revised down to 6.176 million - a 100,000 sow decrease. The USDA projected in last year’s December 1st report that December-February 2021 sow farrowing would be 3.118 million - it ended up at 2.929 million, a difference of almost 200,000 sows at 11 pigs per litter over 2 million pigs underestimated. Lots of examples in other categories of USDA overestimating inventory and production. This underestimation has hurt producers in the pocket book by continually holding down pricing.

The USDA seems to be struggling with its inventory counts and projections. We expect this is continuing with the sow inventory and number of pigs that will come to slaughter in the next 6 months; both will be below what the report indicates. The good news is the report is bullish as is with all pig categories below a year ago.

Last summer lean hogs reached $1.20 lb., current summer lean futures mid 90’s. Our premise is that lower hog supply in 2022 compared to 2021 will lead to lean hog prices matching or exceeding 2021. Demand will be there as U.S. domestic economy continues to strengthen. Chicken and Beef prices are strong supporting Pork. Exports will continue at current levels with possible upside.

Compound the reality of fewer hogs in the USA with a major liquidation in China and Europe and we see total global pork production declining in 2022 compared to 2021. This will lead to higher prices in 2022 compared to 2021 in most if not all the world.

Our scenario paints a bright picture for 2022. Unfortunately, the decreased production comes at a cost to many individuals who are leaving the industry due to the financial consequences of pig prices below the cost of production. The Darwinian scenario of our industry continues to lead to further consolidation. It’s not better, it’s just what it is. None of us have the ability to resist the change, either we adapt or die. We have lived it in the Swine Genetic Industry. Ten – twenty years ago there were several more genetic companies than today. One by one they disappeared unable to adapt, compete, technologically or have enough capital. Now not more than a handful of Genetic companies compete Globally. Genesus is one of them and understands the pressure of the need for continual improvement. It’s amazing to see the improvements over the last few years in litter size, growth, meat quality, liveability, and feed utilization. To expect to be a Genetic survivor we need to accelerate our technological advancements. It’s a journey with no end in sight.

So, as we look at 2022, we see a good year. Hog prices will be strong with lower production in over 75% of the world’s pork production sector. The current high feed prices we expect will limit any quick expansion which could sustain higher hog prices for longer than might be normally thought.

We wish all the best for the year 2022.

All our lives journeys continue.

Jim Long

President - CEO at Genesus Genetics
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