Swine Economics Report

Ron Plain
March 26, 2015

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On March 27, USDA will release the results of their latest survey of U.S. hog producers. My predictions are that the breeding herd is 3.7% larger than a year ago; the market hog inventory is 7.7% larger; and the total herd is 7.3% larger than in March 2014. The big increase in the market hog inventory compared to the breeding herd inventory is because of less baby pig death loss from the PED virus.

My estimates of the March 1 market hog inventory by weight groups are: under 50 pounds 108.3%, 50-119 pounds 107.3%, 120-179 pounds 107.2%, and 180 pounds and heavier 107.8% of a year earlier.

Slaughter of barrows and gilts during December-February was up 1.6% from a year earlier. USDA's December report implied winter slaughter would be up 0.2%. I anticipate an upward revision of USDA's June-August pig crop estimate.

It appears that the average daily hog slaughter during March will be about 8% higher than last year which is more than double what was implied by the December survey.

Hog profits were record high last year which is a good reason to anticipate a bigger sow herd. The slaughter data is not clear. Adjusted for imports, slaughter of U.S. sows during December-February was up 1.8%. But, the sow herd that was 3.7% larger than 12 months earlier, so sow slaughter relative to the inventory was down. Our gilt slaughter data show fewer gilts retained this winter than last.

In their last inventory report, USDA predicted that December-February farrowings would be up 3.9% compared to 12 months earlier and March-May farrowings would be 3.2% higher than a year earlier. I agree that winter farrowings were up 3.9%. I'm forecasting both spring and summer farrowings to be up 3.5% compared to last year.

USDA said pigs per litter last fall were up 0.7% compared to a year earlier. I'm estimating that less death loss from the PED virus caused pigs per litter to be up 4.3% this winter. My estimate is the December-March pig crop was up 8.4% from a year earlier. I expect the March-May pig crop to be up 7.9% compared to last spring.

If my market hog inventory estimates are close to right, hog slaughter during the second quarter of 2015 should be up roughly 7% compared to a year-ago. I expect hog slaughter during the third quarter of 2015 to be up 8% and fourth quarter slaughter to also be up 8% compared a year earlier.

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