4 January 2023

3 minute read

By: Jim Long

The US December 1 Hogs and Pigs Report indicates an inventory smaller than a year ago, and significantly smaller than two years ago.

There are 1.4 million fewer market hogs in inventory than last year and 4.3 million fewer than two years ago.

Kept for breeding is larger than a year ago. We find this an interesting number. Sow slaughter September – November this year similar to last year and maybe slightly higher. Last year September – November breeding herd decreased 65,000.

The Pig Crop over the last 12 months has been 1.571 million smaller than a year ago. 7.630 million less than two years ago. Despite the USDA reporting a larger breeding herd in December, it’s interesting this year’s Pig Crop (September – November) at 33.691 million is smaller than last year's reported 34.123 million (less 532,000).

Litter size is flatlining after several years in the past of steady improvement.

Appears to us that there are no extra pigs coming from increased litter size.

Looks like to us that farrowing’s will be very similar in this December – May compared to the last two years. This combined with no litter size increase tells us there is no sign of any significant increase in hog supply before 2024.

Summary

It appears to us that with less hogs coming in 2023 lean hog prices should be as high or higher than the last two years. In 2021 with an inventory of 4.3 million market hogs higher than this year lean hogs reached over $1.20. In 2022 with more hogs than current inventory reports lean hogs reached over $1.20 lb.

We expect the lean hog price to surpass both 2021 and 2022 in 2023.

Our Reasons

• Less Hogs in USA.
• Less Hogs in Europe.
• Less Hogs in China.
• Lower U.S. Beef Production.
• Lower U.S. Turkey Production (Avian Flu).
• U.S. Pork Exports will be stronger with variety of meat sales to China helping Packer Margins.
• Historically no expansion has ever happened during high feed prices.

Europe

Germany is the second largest hog producer in Europe. Only Spain is larger.

Last week the German statistical office released swine inventory for November.

Inventory November this year was 21.3 million down 1.01 million head from May 2022. Down from last November 2.43 million (-10.2%) from two years ago down 4.74 million head (-18.2%).

Germany’s decline in the two years of inventory of 4.74 million is almost the same as the U.S.'s 4.3 million. Combined 9 million.

The German sow herd continues to decline it has gone down 99,000 since May 2022. It declined steadily from 1.8 million two years ago to 1.39 million in November this year.

Why liquidation? High cost of production due mainly to high feed and energy prices, new animal welfare legislation, and restricted export market access due to African Swine Fever = producers losing money which triggers liquidation.

We expect as country inventory reports come in from across Europe over the next few weeks there will be steady news of smaller inventories. Less hogs in Europe means stronger prices there, less pork to export, and support for Global hog prices.