Swine Economics Report

Ron Plain
September 19, 2014

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On September 26, USDA will release the results of their latest survey of U.S. hog producers. My predictions are that the breeding herd is 2.5% larger than a year ago; the market hog inventory is 3.5% smaller; and the total herd is 2.9% smaller than in September 2013. The unusual combination of more breeding animals and fewer market animals is the result of increased pig death loss caused by the PED virus.

My estimates of the September 1 market hog inventory by weight groups are: under 50 pounds 98.0%, 50-119 pounds 97.0%, 120-179 pounds 95.3%, and 180 pounds and heavier 94.5% of a year earlier.

Slaughter of barrows and gilts during June-August was down 6.9% from a year earlier. USDA's June report implied summer slaughter would be down 4.2%. I anticipate downward revision of USDA's December-February pig crop estimate. Summer carcass weights were nearly 10 pounds above year-earlier levels which imply delayed slaughter and would account for some of the lower-than-expected slaughter.

It appears that the average daily hog slaughter during September will be 5% to 6% lower than last year which is in line with what was implied by the June survey.

Hog profits have been record high in recent months which is a good reason to anticipate a fast growing sow herd. Adjusted for imports, slaughter of U.S. sows during June-August was down 4.1%, out of a sow herd that was 0.5% smaller than 12 months earlier. Our gilt slaughter data show slightly more gilts retained this summer than last. I believe that uncertainty about the PED virus is slowing herd growth.

In their last inventory report, USDA predicted that June-August farrowings would be up 0.1% compared to 12 months earlier and September-November farrowings would be 3.6% higher than a year earlier. I think that summer farrowings were up 0.1%. I'm forecasting fall farrowings to be up 2.6% and December-February farrowings to be up 3.4% compared to last winter.

USDA said pigs per litter last spring were down 5.1% compared to a year earlier. I'm estimating the PED virus caused pigs per litter to be down 2.0% this summer. My estimate is the June-August pig crop was down 1.9% from a year earlier.

If my market hog inventory estimates are close to right, hog slaughter during the fourth quarter of 2014 should be down roughly 4% compared to a year-ago. I expect hog slaughter during the first quarter of 2015 to be down 2% compared to the number slaughtered in January-March 2014.

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