Swine Economics Report

Ron Plain
December 21, 2015

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On Wednesday afternoon, USDA will release the results of their latest survey of the U.S. hog inventory. My prediction is that the swine breeding herd is unchanged from a year ago, the market hog inventory is up 1.7%, and the total hog inventory is 1.5% larger than on December 1, 2014.

My estimates of the December 1 market hog inventory by weight groups are: under 50 pounds 100.3% of a year-ago, 50-119 pounds 100.5%, 120-179 pounds 102.0%, and 180 and heavier 105.3% of a year ago.

Slaughter of U.S. raised barrows and gilts during September-November was up 7.8% from a year ago. USDA's September hogs and pigs report implied fall slaughter would be up 7.8%. Thus, no major revisions to the spring pig crop are likely.

It appears that the average daily hog slaughter during December will be 5.6% higher than a year ago, which is 2.6 percentage points higher than implied by the September pig report. It seems likely the June-August pig crop will need to be revised upward.

Adjusted for imports, sow slaughter was down 0.4% during September-November. The sow herd was 1.1% larger than 12 months earlier, so U.S. sow slaughter relative to the inventory was down 1.5%, implying some breeding herd growth. However, our gilt slaughter data said fewer gilts were retained this fall than last.

In their last inventory report, USDA predicted that fall farrowings would be down 2.5% compared to 12 months earlier and December-February farrowings would down 0.7%. I believe fall farrowings were down 2.2%, winter farrowings will be down 1.4%, and spring farrowings will be down 1.5% compared to a year earlier.

USDA said pigs per litter was up 2.3% this summer. My opinion is that fall pigs per litter were also up 2.3%. With more pigs per litter and fewer litters, my expectation is the September-November pig crop was unchanged from a year ago.

If my predictions are close to right, daily hog slaughter during the first quarter of 2016 should be up about 1.6%. Look for second quarter daily hog slaughter to be 0.3% higher than in 2015. I expect third quarter hog slaughter to be up 1.3% and fourth quarter slaughter to be unchanged from this year. In total, I expect 2016 hog slaughter to be a record 116.5 million head, up 1% from 2015 and 79,000 head larger than the current yearly slaughter record set in 2008.

I expect hog prices to average slightly lower in 2016 than this year, but above the 2008 national average base carcass price of $63.13/cwt.

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