Jim Long President – CEO Genesus Inc. info@genesus.com

Good News – Pig Crop Smaller than Last Year

December 24, 2015

The USDA December 1st Hogs and Pig Report had a very surprising statistic. In the three months of September–November the US pig crop was smaller, compared to the same time last year. This in the face of some dire predictions of massive expansion and unsustainable production levels that could overwhelm future packer capacity. The Pig crop was 30.271 million, down about 400,000 head from the same time a year ago. Less is, not more and this should be positive for summer hog prices.
USDA December 1 hog and pigs Report 2014 (1,000 Head) 2015 (1,000 Head) 2015 as % of 2016
Kept for breeding 5,939 6,002 101
Market 61,838 62,297 101
Market Hogs and Pigs by Weight Group
Under 50 Pounds 19,801 19,508 99
50-119 pounds 17,366 17,282 100
120-179 pounds 13,000 13,210 102
180 pounds and over 11,671 12,296 105
Pig Crop (September-November) 30,633 30,271
  Expected Farrowings December – February 2,840,000, down 2% from a year before. Our Observations  
  • 180 pounds plus in Market Inventory is up about 600,000 over a year ago. You take this increase of total Inventory and everything below 180 pounds is less than 100% of a year ago. This means to us by February 1 year over year hog marketing should have little increase. This should help stabilize lean hog prices.
  • Kept for breeding – December’s Report shows 6,002 million head that is up only 16,000 from the September 1st Not exactly a big expansion. We expect low hog prices have curtailed many expansion plans. Nothing like Red ink to spoil the party.
  • The Pig Crop we expect has been curtailed by the AI extender issue that has hit many AI Studs. We understand it was widespread issue caused by one company whose extender appears to have issues. We expect a class action lawsuit of injured parties could be coming. It is reasonable to expect the issues we have heard could have cut overall production by several 100,000 pigs.
  • Expected Farrowings down 2% considering more sows year over year could also be continued fallout from the extender issue with lower conception and farrowing rate.
  • Most producers are losing money. We expect this scenario is causing some producers to cut back or liquidate. Going forward these losses will also curtail sow herd expansion. The high cost of new buildings and equity levels needed for loans is also holding back expansion.
  • US Pig Crop last twelve months 120,079 million pigs. Breeding herd is 6 million = 20 pigs per breeding animal per year = long way from 30 pigs per.
  • If the US market hog numbers are the same or similar to this past summer which the 1% lower in the under 50lb. category indicates. We believe summer lean futures are currently undervalued. We expect lean hog prices to move towards this past summer lean hog prices.
  • Summer Synopsis – same or fewer hogs – demand should be similar. Packers have been making good money and they are like us farmers (can’t stand prosperity), they will give it back chasing shelf space and export markets etc.
  Wishing you all a Merry Christmas and a Happy New Year!  

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This post was written by Genesus