USDA Breeding Herd expanded in the quarter.

Went from 6,326,000 to 6,333,000. Absolutely absurd to believe this happened. We were expanding when the industry was losing $40 per head. Anyone who knows the industry just laughs at this. Sow slaughter in the quarter was 105,000 more than the same time a year ago. Last year in the quarter USDA reported an increase of 21,000 in the breeding herd. This year according to USDA 7,000 increase.

According to the USDA report, while we were expanding the sow herd in the quarter, we were farrowing 3% less sows while the pig crop was 1.254 million pigs less than a year ago. No wonder there are empty finishers in the country as this decline is just under 100,000 less pigs a week.

Farrowing projections in the fourth quarter are 5% less than a year ago.

A projected decline of 145,000 litters. That’s about 1.6 million fewer pigs if correct. Don’t forget the chicken little ag economists who were projecting a few weeks ago more market hogs in 2021 than 2020. What amazes us is all of our and your hard-earned check off dollars get used to pay for this chicken little drivel.

In the June 1st report, the USDA reported 4,041,000 more hogs in the 50 lbs. – market inventory than the same time a year ago. That was a lot of hogs and that information has hung over the market for many weeks. The vested interests that benefited from depressing the hog price parroted this report and it was effective to keep hog prices at a terrible level.

Last Friday it was 117 days from June 1st. Since June 1st the USDA has reported 44,399,000 hogs marketed this year. Last year the same time frame 42,760,000. The arithmetic tells us in the 117 days from June 1st the US has marketed 1.639 million more hogs than a year ago same time frame.

The USDA on June 1st reported over 50 lbs. – to market there were over 4 million hogs. Where did 2.4 million hogs go? Did they ever exist? If 2.4 million hogs are backed up, we should see heavier slaughter weights. National Daily weight last week 207.8 lbs. a year ago 211.13 lbs.

To our question where did they go? Well the USDA reports on September 1 that were 10% more hogs over 180 lbs. then a year ago (1,270,000 more). Then of course we should see significantly more hogs to slaughter since September 1st and or hog weights higher over a year ago. Last week the US slaughtered 14,000 less head then a year ago and they were lighter weights.

A packer told us last week “If there are 10% more hogs, they must be well hidden.”

Last Thursday 53-54% lean hogs were 74.22¢ lb., a year ago 54.89¢ lb. That’s plus $40 per head. It must be phenomenal demand a $40 price increase from packers with 10% more hogs available.

Another interesting point at the USDA report of 10% more over 180 lbs. is that the 50 -119 lbs. category is 3% less than a year ago. So according to USDA, it will go from 10% more than 3% less in maybe 30-45 days? That’s a huge change in such a short time frame.

Summary

USDA September 1st Hogs and Pigs Report “Defies Logic”

The trend is clear less pigs are coming no matter what the USDA reports says:

• the sow herd did not expand last quarter
• pig crop was down - farrowing projections down
• the lean hog price is stronger currently than anytime in 2020. No one pays more than they have too and we would include packers in that category. Hogs $40 a head higher than a year ago.
• there are no backed up hogs, weights are lower than a year ago. Lots of finishing barns empty looking for feeders.
• US Pork Cut-out 90¢ lb. plus, Germany cut off from Asia due to ASF, will pull more North American pork to Asia plus last week during a virtual conference in Spain it was reported further exports to China from Spain will be limited due to already full freezer space.

It’s been a real tough grind financially and we producers have been subjected to “vested experts” pushing us to hedge at the low of the market because it wouldn’t go any higher. That was $45 head lower in mid-August. The good news there the reality is in the market and the price is higher and we expect further strength in 2021 market as hog supply runs below year-before levels.

“If I ever went to war, I would want pig farmers with me in my foxhole, they have a tremendous will to survive.”