Swine Economics Report

Ron Plain
September 25, 2015

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This afternoon, USDA will release the results of their latest survey of U.S. hog producers. My expectations are that the breeding herd is 0.3% smaller than a year ago; the market hog inventory is 4.6% larger; and the total herd is 4.2% larger than in September 2014. The big increase in the market hog inventory relative to the breeding herd inventory is because of less death loss from the PED virus.

My estimates of the September 1 market hog inventory by weight groups are: under 50 pounds 101%, 50-119 pounds 104%, 120-179 pounds 107%, and 180 pounds and heavier 110% of a year earlier.

Slaughter of U.S. raised barrows and gilts during June-August was up 11.9% from a year earlier. USDA's June report implied summer slaughter would be up 11.8%. No large revisions of USDA's past pig crop estimates are likely.

It appears that the average daily hog slaughter during September will be about 9.6% higher than last year which is 0.9 percentage points more than what was implied by the June survey.

Adjusted for imports, slaughter of U.S. sows during June-August was up 6.5%. The sow herd was 1.2% larger than 12 months earlier, so sow slaughter relative to the inventory was up 5.3%, implying no growth. Our gilt slaughter data show fewer gilts retained this summer than last.

In their last inventory report, USDA predicted that June-August farrowings would be down 2.5% compared to 12 months earlier and September-November farrowings would be 4.3% lower than a year earlier. I believe summer farrowings were down 0.5%. I'm forecasting fall farrowings to be down 3.0% and winter farrowings to be down 2.8% compared to last year.

USDA said pigs per litter last spring were up 6.0% compared to a year earlier. I'm estimating that less death loss from the PED virus caused pigs per litter to be up 2.5% this summer. My estimate is the June-August pig crop was up 1.9% from a year earlier. I expect the September-November pig crop to be down 0.9% compared to last fall.

If my market hog inventory estimates are close to right, hog slaughter during the fourth quarter of 2015 should be up roughly 6% compared to a year-ago. I expect hog slaughter during the first quarter of 2016 to be up 0.9% and second quarter slaughter to be down 0.2% compared a year earlier. I expect 2016 hog slaughter to total 115.8 million head.

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