September 1^st USDA Hogs and Pigs Report

September 28, 2015

Lots of Pigs!

The US Department of Agriculture September 1^st quarterly Hogs and Pigs Report says the US has reached a new record in the number of hogs and pigs on farm.

Hogs and Pigs Inventory by Class, Weight Group, and Quarter – United States: 2014 and 2015 [May not add due to rounding. Blank data cells indicate estimation period has not yet begun]
Item	2014 (1,000 head)	2015 (1,000 head)	2015 as percent of 2014 (percent)
September 1 inventory
All hogs and pigs	65,979	68,395	104
Kept for breeding	5,920	5,986	101
Market	60,059	62,410	104
Market hogs and pigs by weight groups
Under 50 pounds	20,390	20,291	100
50-119 pounds	17,458	17,986	103
120-179 pounds	12,112	13,080	108
180 pounds and over	10,098	11,053	109

The US inventory on September 1^st was 68.4 million, up 4% from a year ago and a record high. Congratulations all! We have hit a new plateau in supply and we obviously must be confident that there will be markets for the pork. The US breeding inventory was up to 5.99 million or 1% from a year ago. Not exactly a huge increase compared to what some pundits thought was going to be rampant sow herd expansion. Certainly the 4% more pigs didn’t come from significantly more sows but mostly from record June – August litter size of 10.39 compared to 10.16 a year ago. Two things here, PED has mostly disappeared which has helped pigs stay alive resulting in better litter size; but the other component is litter size improvement by swine genetic companies. At Genesus our genetic trend line improvement for litter size is .22 per litter per year. As the swine genetic industry continues to consolidate and the survivors work to get better, the litter size improvement is a reality now and in the future. The June – August Pig Crop was 30.6 million only up 1% from last year, while the number of sows farrowed in the period of 2.94 million was down 2%. The Pig Crop up only 1% is why the pressure isn’t great on finishing or shackle space. The Pig Crop increase of 1% June – August means more hogs to market late 2015, and the first part of 2016 will be quite similar to a year prior. The small increase in the Pig Crop to us is somewhat surprising and more bullish than we expected. We are not sure that expected farrowings are an accurate barometer but this quarter Sept – Nov US producers expect to farrow 2% less and Dec – Feb 1% fewer. If this comes to fruition next summer and fall hog supply will be similar to this year. Which in our opinion is more positive for markets than we were prepared for.

Summary

Hog and Pig numbers are manageable. Sow herd expansion has not been significant. Pig Crop and expected farrowings indicate US hog numbers in 2016 will be similar to 2015. The lack of expansion indicates to us despite record profits in 2014 our industry is not bullish about the future. You need capital and courage to expand. The number of producers with capital and courage remains limited.

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