Swine Economics Report

Ron Plain
December 19, 2014

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On December 23, USDA will release the results of their latest survey of U.S. hog producers. My predictions are that the breeding herd is 3.0% larger than a year ago; the market hog inventory is 0.9% larger; and the total herd is 1.1% larger than in December 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 December 1 market hog inventory by weight groups are: under 50 pounds 103.5%, 50-119 pounds 102.5%, 120-179 pounds 98.5%, and 180 pounds and heavier 97.3% of a year earlier.

Slaughter of barrows and gilts during September-November was down 5.2% from a year earlier. USDA's September report implied fall slaughter would be down 4.5%. I anticipate a slight downward revision of USDA's March-May pig crop estimate.

It appears that the average daily hog slaughter during December will be about 3.0% lower than last year which is below what was implied by the September survey.

Hog profits have been record high this year which is a good reason to anticipate a fast growing sow herd which is exactly what sow slaughter indicates. Adjusted for imports, slaughter of U.S. sows during September-November was down 5.7%, out of a sow herd that was 1.8% larger than 12 months earlier. However, our gilt slaughter data show fewer gilts retained this fall than last. I believe that uncertainty about the PED virus is slowing herd growth.

In their last inventory report, USDA predicted that September-November farrowings would be up 4.0% compared to 12 months earlier and December-February farrowings would be 3.8% higher than a year earlier. I think that fall farrowings were up only 3.5%. I'm forecasting winter farrowings to be up 4.1% and March-May farrowings to be up 3.8% compared to last spring.

USDA said pigs per litter last summer were down 1.6% compared to a year earlier. I'm estimating the PED virus caused pigs per litter to be down 0.4% this fall. My estimate is the September-November pig crop was up 3.0% from a year earlier. I expect the December-February pig crop to be up 6.7% compared to last winter.

If my market hog inventory estimates are close to right, hog slaughter during the first quarter of 2015 should be up roughly 0.2% compared to a year-ago. I expect hog slaughter during the second quarter of 2015 to be up 3.9% and third quarter slaughter to be up 6.9% compared a year earlier.

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