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US Swine Economics Report: Productivity growth continues

by 5m Editor
3 July 2007, at 9:56am

US - USDA's June estimate of the nation's hog inventory came in near the high end of trade expectations.

At 100.9% of last June's level, the breeding herd was 0.4 points above the average of pre-release trade estimates. The trade forecast the market hog inventory to be up 1.3%. USDA said it was actually up 1.8%. USDA predicted June-August farrowings would be up 1.6% (the trade predicted up 0.6%) and USDA said fall farrowings would be up 0.4% (the average of trade estimates: +0.5%).

As expected, USDA revised upward some of their past inventory estimates. Based on the inventory numbers in the March report, hog slaughter during March-May was expected to be up 1.55%. It actually came in 3.48% above the same months in 2006 (or up 3.35% after adjusting for the increase in imports of Canadian slaughter hogs). So, USDA revised up their March inventory of pigs weighing 120-179 pounds by 2.2%. The also increased the size of the September-November pig crop by 356,000 head and increased fall 2006 farrowings from 100.3% of a year ago (March estimate) to 101.7% (new estimate).

Productivity growth continues. Pigs per litter in the March-May quarter averaged 9.15, the highest ever for any quarter and the 15th consecutive quarter above year-earlier levels.

USDA said the inventory of market hogs weighing over 180 pounds was up 3% on June 1, which might be a bit low since daily hog slaughter in June was up 4%.

USDA said the inventory of market hogs weighing 120-179 pounds was up 1.2% on June 1 and the inventory of market hogs weighing 60-119 pounds was up 1.5%. If these numbers are close to right, third quarter hog slaughter should be up roughly 1.5% if imports of slaughter hogs from Canada continue to run above year-ago levels. If so, expect July-September live hog prices to average a bit under $50/cwt.

USDA said the inventory of market hogs weighing less than 60 pounds was up 1.8% on June 1, implying fourth quarter hog slaughter will be up roughly 2%. I expect fourth quarter hog prices should average in the mid $40s.

Increased availability of circo-virus vaccine may drive down death loss and result in higher slaughter, and lower prices, than implied by the market hog inventory.

5m Editor