Swine Economics Report

USDA's latest survey of the U.S. swine herd said the market herd was down 1.9% on June 1 and the breeding herd was down 2.7% compared to 12 months earlier. The total inventory of hogs was down 2.0%. The breeding inventory was smaller and the market hog inventory was a bit larger than the average of trade forecasts.

USDA said March-May farrowings were down 2.7% and forecast June-August farrowings to be down 3.3% and September-November farrowings to be down 2.2%. Pre-release trade estimates put March-May farrowings at down 2.7%, forecast June-August to be down 3.3% and September-November down 2.5%.

Pigs per litter in the March-May quarter averaged a record 9.61 head, up 2.5% compared to a year earlier, and the 23nd consecutive quarter above year-ago levels. The last four quarters have averaged 2.45% more pigs per litter, offsetting much of the decline in farrowings.

Perhaps the most interesting numbers in the June report are the young pig inventories. USDA says the June inventory of pigs weighing less than 60 pounds was 2.4% below year-earlier levels, but the March-May pig crop was only down 0.3%. Imports of feeder pigs from Canada were down 25% during March-May. Thus, Canada accounted for 90% of the drop in our inventory of light weight pigs.

USDA said the inventory of market hogs weighing 60-179 pounds was down 2.2% on June 1. If correct, daily hog slaughter during the third quarter should be down 2.2% plus the drop in slaughter hogs from Canada. Look for hog slaughter during July-September to average at least 3% lower than last year with carcass hog prices averaging in the mid to upper $50s.

USDA said the inventory of market hogs weighing less than 60 pounds was down 2.4% on June 1, implying hog slaughter during the fourth quarter of 2009 will be down roughly 3% given the sharp downward trend in hog imports from Canada. I expect fourth quarter carcass hog prices to average in the low to mid $50s.

Hog slaughter will be down 3-4% this year and hopefully even more in 2010. Unfortunately, there is no end in sight to the string of financial losses plaguing producers.

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