Swine Economics Report

Ron Plain
March 27, 2014

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On March 28, USDA will release the results of their latest survey of the U.S. swine herd. The report is highly anticipated for indication of the impact of the PED virus on hog numbers. My opinion is that PED is seriously disrupting production and has left the hog inventory far below the year-earlier level.

My predictions are that the breeding herd is 1.0% smaller than a year ago; the market hog inventory is 8.4% smaller; and the total herd is 7.7% smaller than in December 2012. My estimates of the March 1 market hog inventory by weight groups are: 180 pounds and heavier 94.5%, 120-179 pounds 92.3%, 50-119 pounds 91.0%, and under 50 pounds 90.0% of a year earlier.

Slaughter of barrows and gilts during December-February was up 0.2% from a year earlier. USDA's December report implied winter slaughter would be down 0.2%. It appears that the average daily hog slaughter during March will be between 5% and 6% lower than last year rather than down 0.5% as implied by the December survey. I anticipate large downward revisions of USDA's September-November pig crop estimates.

Adjusted for imports, slaughter of U.S. sows during December-February was down 3.1%, out of a sow herd that was 1.1% smaller than 12 months earlier. Our gilt slaughter data show fewer gilts retained this winter than last. Economics indicates the breeding herd should be growing. I think PED is preventing that.

In their last inventory report, USDA predicted that December-February farrowings would be up 1.3% compared to 12 months earlier and March-May farrowings would be 1.4% higher than a year earlier. I think that winter farrowings were down 2.2%. I'm forecasting spring farrowings to be down 0.6% and June-August farrowings to be up 1.0% compared to last summer.

I'm estimating the PED virus caused pigs per litter to be down a huge 7.1% this winter. The biggest quarterly decline in pigs per litter in the last 30 years was a 1.68% decline in June-August of 1988. My estimate is the December-February pig crop was down 9.2% from a year earlier.

I expect hog slaughter during the second quarter of 2014 to be down 8.3% compared to a year-ago. I expect hog slaughter during the third quarter to be down 8.1% compared to the number slaughtered in July-September 2013.

If I have over-estimated the impact of PED, then my market hog numbers are too low.

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