Pork Commentary July 3, 2012

June U.S.D.A. Quarterly Hogs and Pigs Report: Apocalypse Not Now

For weeks we all have been exposed to the wringing of hands by the Chicken Little’s that U.S. packers would be overwhelmed by hogs this fall and that there would not be sufficient shackle space to handle a perceived deluge of hogs.  Some chicken little’s went so far to bring up the fall of 1998 when hogs crashed to 10 cents a pound. In our opinion the U.S.D.A. June Hogs and Pigs Report dispels all Fall Apocalypse.

U.S.D.A. Market Hogs – June 1^st

^{(thousand head)}

	2009	2010	2011	2012
MARKET	60,842	58,362	59,517	59,967

The U.S.D.A. has counted about 450,000 more market hogs this year June compared to last.  On a 25 week production cycle less than 20,000 extra a week or 1%.  No way will packers shackle space be overwhelmed.  Of note June 2012 is about one million fewer market hogs than June 2009.  Also U.S.D.A. June 1 under 50 pounds this year (this falls market hogs) is 19,558 million up only 15, 000 head from last year.

June U.S. Breeding Herd

(thousand head)

	2009	2010	2011	2012
Kept for breeding	5968	5788	5803	5862

The breeding herd has expanded, up 60,000 from a year ago but still 100,000 head lower than 2009.  The U.S.D.A. projects that 42,000 of the 60,000 increase in the last year came from March 1^st to June. When there is profitability there will be expansion.  We expect the recent spike in corn will stymie optimism going forward.  In Canada we are aware of over 15,000 sows of early wean production that are currently going to the U.S. which are being eliminated, this from a combination of failure of contracts being honoured, low SEW prices, and high feed.  It is not all pretty in the hog business and this in itself will slow expansion.

Sows Farrowing

(thousand head)

In the six months December – May U.S. farrowing’s stayed very similar to last year up only 36,000.  Sow farrowing’s seemed to have had little productivity gain.  Farrowing’s of 5796 (thousands) and a breeding herd of 5862 indicates less than 2 farrowing’s per breeding animal per year.  Not exactly 2.5 litters per year is it?

Pig Crop

(thousand head)

The pig crop keeps growing, up one million for the last six months year over year.  What’s interesting to us is the last quarter.  March – May was up only about 200,000 of the one million – the effect of PRRS?

Productivity

            The U.S. pig crop over the last twelve months June – May was 116,841 million head.  The breeding herd averaged about 5.820 million over the same twelve months.  When we divide the pig crop by the breeding herd in that time frame we get 20.07 pigs per breeding head.  Not exactly 25 is it?  Lots of room for improvement, as half of the industry is averaging below 20.  We would challenge our competitors to find one Genesus customer below the industry average.

National Swine Industry Conference

            If you’re coming to NSIC join Genesus 8 pm Sunday night at a reception in Kahunaville Lounge.  On Monday at 2:30 pm Jim Long will be presenting ‘Global Swine Markets and how they affect the U.S.’

Summary

            The June 1^st U.S.D.A. report indicates little change year over year in the hog inventory.  Pork exports will stay strong over the coming months.  There will continue to be less beef and chicken.  We have lean hogs over $1.00 we need it with the rocketing feed prices.  Pray for rain!

Categorised in: Pork Commentary

This post was written by Genesus