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US Swine Economics Report

by 5m Editor
20 March 2007, at 11:27am

US - Regular report by Ron Plain on the US Swine industry.

On the last Friday of March, USDA will release the results of their latest survey of the U.S. swine inventory. My calculations indicate the breeding herd is unchanged from a year ago, the market hog inventory is 2.4% larger, and the total herd is 2.2% bigger than on March 1, 2006.

Although producers have had good returns during the last 3 years, I believe the dramatic increase in corn prices has stopped breeding herd growth. U.S. sow slaughter during December-February was up 5.3% compared to last winter, despite a sow herd that was only 1.3% larger on December 1. Slaughter sow imports from Canada were only 2% more this winter than last.

In the December Hogs and Pigs Report, USDA predicted December-February farrowings would be 2.2% larger than a year earlier and March-May farrowings would be up 0.5%. I'm estimating that winter farrowings were up 2.1% and agree with USDA that spring farrowings will be 0.5% larger than last year. My forecast is that summer farrowings will be the same as in June-August 2006.

I believe that pigs per litter this winter was up 0.8%, making the December-February pig crop 102.9% of a year ago. Feeder pig imports from Canada were up 4.9% this winter, so the light weight market hog inventory should be up a bit more than the pig crop implies.

My estimates of the March 1 market hog inventory by weight groups are: 180 pounds and heavier 103.3%, 120-179 pounds 101.5%, 60-119 pounds 101.5%, and under 60 pounds 103.1% of a year earlier. Hog slaughter was extremely light the first few days of March because of snow, but the last two weeks have been up 5.9% compared to last year.

My estimate of the number of hogs in the 60-179 weight groups implies that second quarter hog slaughter will be 1.5% above year-ago levels, or a bit higher if the inflow of slaughter hogs from Canada continues running above year-ago levels. I expect live hog prices to average close to $50/cwt in the second quarter of 2007.

If my estimate of the light weight inventory is correct, third quarter 2007 hog slaughter should be a little over 3% larger than the number slaughtered in July-September 2006. If so, look for third quarter 2007 hog prices to average close to $47/cwt on a live basis, down $3 from a year earlier.

5m Editor