USDA said the market inventory was up 0.6 per cent. The average of the pre-release trade estimates was for a 0.1 per cent decline. Kept for breeding was up 0.5 per cent according to USDA. The trade estimate was for a 0.2 per cent decline. USDA’s estimate of the total number of hogs and pigs on US farms at the start of March was 0.6 per cent larger than 12 months earlier. The average of the trade estimates was for no change. (See Table 1 below)

USDA made some upward revisions to past inventory estimates to bring them more in line with winter hog slaughter. USDA raised their previous estimate of the December market hog inventory by 300,000 head (0.5 per cent), increased the reported number of sows farrowed during June-August 2010 by 1.3 per cent and increased the June-August pig crop by 359,000 head (1.3 per cent).

The March swine breeding herd was 7.1 per cent lower than at the last cycle peak in December 2007. For the last five quarters, the US swine breeding herd has been within 12,000 head of 5.772 million. In 2010 the March breeding herd inventory was 90,000 head smaller than on 1 December. This year it was 10,000 head larger. Thus, USDA says the breeding herd grew by 100,000 head more this winter than last. December-February sow slaughter was down by 28,900 compared to a year ago. About 35,500 of the drop in sow slaughter was due to reduced imports of Canadian sows for slaughter, leaving 6,600 more US sows slaughtered this winter than last. The USDA data implies 106,600 more gilts were added to the breeding herd this winter than last.

USDA said winter (December-February) farrowings were down 0.6 per cent and forecast both spring and summer farrowings to be down 2.6 per cent compared to 12 months earlier. (See Table 3) Winter farrowings were 0.2 per cent higher than trade expectations. The forecast of spring farrowings is 1.2 per cent lower than expected and summer farrowings are forecast to be 2.1 per cent below the trade forecast. The lack of growth is likely due to high feed costs which have pushed breakeven prices above $60/cwt (live) and $80/cwt (carcass). If USDA is right, the number of sows farrowed will be below year-earlier for 13 consecutive quarters.

USDA says the breeding herd is up 1.5 per cent, but the number of litters to be farrowed in the next six months will be down 2.6 per cent. That seems an unlikely combination.

The number of pigs per litter remains high. The trade was expecting a 1.7 per cent increase, but USDA said December-February pigs per litter were 2.0 per cent higher than the same months last year. The benefit of reduced farrowings is being offset by increases in the number of pigs weaned per litter. Winter farrowings were down 0.6 per cent; but with 2.0 per cent more pigs per litter, the winter pig crop was up 1.4 per cent.

USDA’s survey indicated the number of market hogs weighing 180 pounds or more on 1 March was even with 12 months earlier. (See Table 2) However, it looks like March barrow and gilt slaughter will be 1.5 per cent below last year. The 120-179 pound market hog group was also unchanged from March 2010. The 50-179 pound inventory was up 1.5 per cent; and the inventory of pigs weighing less than 50 pounds was up 0.7 per cent compared to a year earlier.

Live animal imports from Canada during the December-February quarter showed feeder pigs down 0.9 per cent and slaughter hog imports down 9.5 per cent. In 2007, 10.0 million live hogs were imported from Canada. In 2009, 6.4 million head came south. Imports of Canadian hogs and pigs for 2010 totaled 5,747,827 million head. Look for 2011 imports to total close to 5.5 million head.

Based on the 50-179 pound market hog inventory and the expectation of little change in live hog imports, our forecast is for an increase of 1.0 per cent in second quarter 2011 daily hog slaughter compared to April-June 2010. With this level of pork production, we expect 51-52 per cent lean hogs to average in the low to mid $60s live and Iowa-Minnesota negotiated sales to average in the low to mid $80s on a carcass weight basis.

For the third quarter of 2011 we expect hog slaughter to be up 0.8 per cent compared to July-September 2010 with 51-52 per cent lean hogs averaging in the mid $60s live, and Iowa hogs averaging in the mid $80s/cwt on a carcass basis.

With the number of litters farrowed expected to be down 2.6 per cent this spring and pigs per litter increasing by 2 per cent or so, the spring pig crop is likely to be slightly below a year earlier. We are forecasting fourth quarter 2011 slaughter to be down 0.9 per cent compared to a year ago. Look for carcass prices of barrows and gilts to average in the upper $70s/cwt. Slaughter weights are likely to average 1.0-1.5 per cent higher this year.

The forecast 2.6 per cent decrease in fall farrowings should be supplemented by an increase in litter size but still yield a fall pig crop below a year-earlier causing first quarter 2012 hog slaughter to be down 1 per cent or so on a daily basis. Our estimates of slaughter and prices for the next four quarters are in Table 4. Our price forecasts are well below what the futures market is predicting.

Table 1. Hog Inventories March 1, U.S.

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 2011 as % of 2010
 Market 100.6
 Kept for breeding 100.5
 All hogs and pigs 100.6
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Table 2. Market Hogs on Farms December 1, U.S.
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 Weight Category 2011 as % of 2010
 Under 50 pounds 100.7
 50 - 119 pounds 101.5
 120 - 179 pounds 100.0
 180 pounds and over 100.0
 Pig Crop
 December-February 101.4
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Table 3. Sows Farrowed and Farrowing Intentions, U.S.
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 2009 as % of 2008
 March-May 2009 98.9
 June-August 2009 96.2
 September-November 2009 96.3
 2010 as % of 2009
 December-February 95.4
 March-May 2010 97.1
 June-August 2010 99.5
 September-November 2010 97.7
 2011 as % of 2010
 December-February 99.4
 March-May 2011 97.4
 June-August 2011 97.4
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Table 4. Commercial Hog Slaughter and Barrow and Gilt Price by Quarter
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 --Comm. Slaughter-- ------Barrows & Gilts, price/cwt------
 Change 51-52% Iowa-Minn Non-packer-sold
Year & Million from Lean Base Net
Quarter Head Year ago Live Carcass Carcass
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2006 1 26.208 + 2.6% $42.63 $56.38 $58.37
 2 24.839 - 0.8 48.45 65.27 65.96
 3 25.810 + 1.1 51.83 68.04 69.13
 4 27.880 + 1.4 46.13 60.53 62.04
 Year 104.737 + 1.1 47.26 62.54 63.86

2007 1 26.684 + 1.8% $46.04 $59.90 $62.69
 2 25.526 + 2.8 52.55 69.45 71.39
 3 26.566 + 2.9 50.34 66.14 69.17
 4 30.396 + 9.0 39.44 52.08 56.83
 Year 109.172 + 4.2 47.09 61.91 65.04

2008 1 29.601 +10.9% $39.64 $52.49 $57.41
 2 27.941 + 9.5 52.51 70.43 72.24
 3 28.696 + 8.0 57.27 75.67 78.05
 4 30.214 - 0.6 41.92 55.60 61.38
 Year 116.452 + 6.7 47.83 63.58 67.27

2009 1 28.503 - 3.7% $42.11 $57.23 $60.43
 2 27.072 - 3.1 42.74 57.32 61.76
 3 28.428 - 0.9 38.90 51.43 56.68
 4 29.615 - 2.0 41.20 54.98 57.64
 Year 113.618 - 2.4 41.24 55.23 59.11

2010 1 27.631 - 3.1% $50.41 $66.81 $68.32
 2 26.069 - 3.7 59.60 79.04 79.42
 3 26.927 - 5.3 60.13 79.44 80.70
 4 29.629 + 0.1 50.11 65.21 69.26
 Year 110.257 - 3.0 55.06 72.62 74.47

2011 1* 27.490 - 0.5 $60.06 $79.00 $80.50
 2** 26.330 + 1.0 62 - 65 82 - 86 84 - 88
 3** 27.150 + 0.8 63 - 66 83 - 87 85 - 89
 4** 29.360 - 0.9 58 - 61 77 - 81 79 - 83
 Year** 110.330 + 0.1 60 - 63 80 - 84 82 - 86

2012 1** 27.220 - 1.0 $61 - 64 $81 - 85 $84 - 88
 *estimated
 **forecast
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Further Reading

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You can view the USDA Quarterly Hogs and Pigs Report - March 2011 by clicking here.