Swine Economics Report

Ron Plain
December 28, 2009

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On December 30, USDA will release the results of their latest survey of the U.S. swine inventory. My estimates are that the breeding herd is 2.7% smaller than a year ago; the market hog inventory is 3.0% smaller; and the total herd is 2.9% smaller than on December 1, 2008.

My estimates of the December 1 market hog inventory by weight groups are: 180 pounds and heavier 97.1%, 120-179 pounds 96.2%, 50-119 pounds 96.4%, and under 50 pounds 97.9% of a year earlier.

Slaughter of barrows and gilts was down 1.0% during September-November due in large part to a 34% drop in slaughter hogs imports from Canada. Slaughter of U.S. raised barrows and gilts was about 0.4% higher than implied by the September inventory report.

In their last inventory report, USDA predicted that both September-November farrowings and December-February farrowings would be 3.1% smaller than a year earlier. I'm in agreement that fall farrowings were down 3.1%. I am forecasting winter farrowings will be down 3.0% and spring farrowings to be down 2.0% compared to March-May 2009. Despite a lot of red ink, 2009 sow slaughter has been low. March-May sow slaughter was down 14.9%, June-August was down 4.6%, and September-November was down 1.7% compared to 12 months earlier.

I believe pigs per litter were up 1.9% this fall. My estimate is the September-November pig crop was 98.7% of a year earlier. Feeder pig imports during September-November were 21.6% below last fall's level, so the light weight inventory should be down more than the pig crop.

My estimate of hogs in the 50-179 weight groups implies that first quarter hog slaughter will be roughly 4% below year-ago levels, if as expected, the inflow of slaughter hogs from Canada continues to be down. I expect live hog prices to average close to $48.50/cwt ($64/cwt carcass) in the first quarter of 2010.

I expect hog slaughter during the second quarter of 2010 to be 2-3% lower than the number slaughtered in April-June 2009. If so, second quarter 2010 hog prices should average close to $50.50/cwt on a live basis and $67/cwt on a carcass basis.

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