Swine Economics Report

Ron Plain
June 20, 2014

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On June 27, USDA will release the results of their latest survey of U.S. hog producers. My predictions are that the breeding herd is 2.0% larger than a year ago; the market hog inventory is 3.6% smaller; and the total herd is 3.1% smaller than in June 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 June 1 market hog inventory by weight groups are: under 50 pounds 96.9%, 50-119 pounds 95.6%, 120-179 pounds 96.3%, and 180 pounds and heavier 96.7% of a year earlier.

Slaughter of barrows and gilts during March-May was down 5.3% from a year earlier. USDA's March report implied spring slaughter would be down 3.7%. I anticipate downward revision of USDA's September-November pig crop estimate. Spring carcass weights were 8.6 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 June will be 3% to 4% lower than last year which is in line with the March 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 March-May was down 6.9%, out of a sow herd that was 0.3% larger than 12 months earlier. However, our gilt slaughter data show fewer gilts retained this spring than last. I believe the PED virus is slowing herd growth.

In their last inventory report, USDA predicted that March-May farrowings would be up 2.4% compared to 12 months earlier and June-August farrowings would be 2.0% higher than a year earlier. I think that spring farrowings were up 2.0%. I'm forecasting summer farrowings to be up 2.4% and September-November farrowings to be up 2.8% compared to last fall.

I'm estimating the PED virus caused pigs per litter to be down 5.0% this spring. USDA said pigs per litter last winter were down 5.5% compared to a year earlier. My estimate is the March-May pig crop was down 3.1% from a year earlier.

If my market hog inventory estimates are close to right, hog slaughter during the third quarter of 2014 should be down roughly 4% compared to a year-ago. I expect hog slaughter during the fourth quarter to be down 3% compared to the number slaughtered in October-December 2013.

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