CME: Highlights of Quarterly Hogs and Pigs Survey

Below are some of the highlights from this report:

• The total inventory of hogs and pigs in Canada was estimated at 11.810 million head, 1.4 per cent higher than a year ago. Our estimate coming into the report was for a 1.2 per cent increase in overall inventory. While the total inventory number is higher than a year ago, it is in line with the numbers that we saw in the January count. Keep in mind that total hog numbers in Canada in Q1 of 2010 were sharply lower but then recovered modestly in the second half of last year. The 1 April inventory was 85,000 head or 0.7 per cent lower compared to the 1 January level.
  
  
• The inventory of the breeding herd appears to have stabilized following a sharp liquidation between 2005 and 2010 (see chart below). Since Q1 of 2010, the breeding herd in Canada has declined by about 20 per cent. The latest count put the total hog breeding stock at 1.308 million head, 0.4 per cent lower than a year ago. The breeding stock number was in line with our expectations coming into this report. The breeding herd inventory rose modestly in Q4 of 2010 but higher sow slaughter rates in Q1 indicate that high feed costs and the strong Loonie are causing producers to rethink any expansion plans. We calculate that sow slaughter in Canada during Q1 was up 15 per cent compared to the previous year.

• One of the more uncertain parts of the hogs and pigs report in Canada are the farrowing intentions, as evidenced by the sometimes large differences between actual and intended farrowings. In the last five years, the average difference between actual and intendend farrowings has been 1.4 per cent, ranging from –3 per cent to + 8.3 per cent. Farrowing intentions for Q2 are reported at 707,200 head, +0.7 per cent compared to the previous year while Q3 farrowing intentions are 0.2 per cent lower than a year ago. The farrowing intentions are in line with the overall breeding herd inventory. Our expectation is the breeding herd will continue to decline in Q2 and we project farrowings in Q4 to be down about 1 per cent from 2010 levels. The following chart to the right shows a forecast of the pig crop in Canada based on the latest farrowing intentions and our forecasts for pigs per litter in the reference period. We currently forecast the pig crop in Canada to be up 1 per cent in Q2 and then post a 0.3 per cent and 0.2 per cent increase in Q3 and Q4, respectively.

Bottom line: The latest Canadian hog inventory showed that, as in the US, Canadian hog producers show little appetite for expansion. The breeding herd has stabilized and overall hog production in 2011 should be only modestly higher from 2010 levels, with improvements in productivity offsetting the modest decline in the breeding herd.