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Jim Long Pork Commentary: US hogs and pigs report - "Lots of pigs"

4 July 2019, at 9:30am

The USDA report on 1 June inventory indicates “lots of pigs”, 4 percent more than a year ago. No doubt good pork demand domestically and globally will be important for maintaining profitable prices.

USDA 1 June hogs and pigs report
USDA 1 June hogs and pigs report

© Genesus

Observations

  • Breeding herd has expanded one percent over the last year. Certainly an increase but not what you would call aggressive expansion.
  • Market hots are up four percent. Eight percent higher in the 180lb plus category, all other weight groups up three percent. This tells us we have some heavy weight hogs to clean up.
  • Sows farrowing last three months are no higher than a year ago.
  • All the pig crop increase has come from a major jump in litter size. It's interesting that litter size is increasing faster than sows farrowing. Not sure why farrowing rate is not improving. Actually, you could make the argument it has declined. Same number of farrowing sows with larger breeder herd means that there's a decline in the farrowing rate.
  • In the last year, Nebraska has been the leader in sow herd expansion; up 30,000 to 450,000. No state declined in the breeding herd numbers over the last year.

How will this effect prices? Its all about China and global market access. Spain, which is seeing excellent sales in China (no tariffs) has hog prices $50 per head higher then US producers. Market access and tariffs are so important to each and every exporting country

G20

President Trump (USA) and President Xi (China) met at G20 in Japan. They have agreed to restart trade talks. President Trump indicated planned tariffs increases on Chinese goods would not proceed at this time. As we wrote earlier Spain with tariff free access to China versus USA’s 70 percent tariff are seeing hog prices $50 per head higher. Its obvious removal of tariffs on US pork would be significantly positive for US and Canada hog producers.

Summary

USDA report shows lots of hogs. US Packer Capacity can handle. Good idea for US hog producers and China market access – tariff issue gets sorted.