US March 1 Hogs and Pigs Report

The USDA released its March 1^st Hogs and Pigs Report ten days ago.  We were in Estonia at the time and did not see the report until our return.  Below our observations:

March 1 (Thousand Head)
	2012	2013	2013 as % of 2012
Kept for Breeding	5,820	5,834	100
Market	59,117	60,077	102
Market Hogs and Pigs by weight groups
Under 50 Pounds	19,235	19,426	101
50-119 Pounds	16,409	16,650	101
120-179 Pounds	12,780	13,509	102
180 Pounds and over	10,693	10,942	102

•  It appears the USDA sow inventory is basically the same after 12 months of mostly financial losses for the industry.  The staying power of producers that this reflects is amazing.  To be consistent we don’t believe this number.  Our observations tell us the breeding herd declined over the last twelve months.  Too many producers cut back their breeding herd or quit relative to any expansion to have a sow inventory that did not decline.  We could be and maybe are wrong but it’s what we believe.  If we held sow inventory it will be first time in swine history when sow inventory did not decline with hog to corn ratio consistently under 15 to 1.

• Market Inventory is showing 1% more in the under 120 lb. category which will be hogs coming to market in May or later.  We expect when hog supply declines to almost year over year levels coupled with normal seasonal decline, lean hog prices will push closes to $1.00 lean a lb.

(1,000) Head
December – February	2012	2013	2013 as % of 2012
Sows Farrowing	2,864	2,879	101
Pig Crop	28,550	29,019	102
Pigs per Litter	9.97	10.08	101

USDA data shows the continuation of productivity increases in our industry.  Bigger litters better farrowing rate leading to a bigger pig crop.  We expect this trend to continue as we all push towards more efficiency due to the need to financially survive. There is no doubt hog producers are hanging on the hope and optimism to get to cheaper feed.  The USDA’s release a couple weeks ago of larger than expected corn inventory took almost $1.00 a bushel of nearby corn. Dropping the cost to produce a market hog about $10.00 per head. Anyone who is engaged in the industry knows the South American corn and soybean crop is a record.  The USDA projects US corn average plantings at the highest in eighty years.  Almost everyone knows the US has never had two severe droughts in a row.  There are market guru’s in Chicago taking corn at $3.50 a bushel if the crop comes in as projected of 14 billion bushels plus.  To some extent we don’t have a hog market we a have a grain market.  For many then, live and fortunes are tied to the global supply and price of feed products.  The hog supply of 1% either way pales to a corn crop that could vary 30% in supply?  Swine cost of production due to feed could reasonably move $30-40 per head.  A 1% change in hogs is almost irrelevant.  Our lives are tied to feed cost.  Pray for rain.

Categorised in: Pork Commentary

This post was written by Genesus