WASHINGTON — U.S. pork producers have kept 5.814
million hogs for breeding, according to the recent numbers released in the U.S.
Department of Agriculture’s Quarterly Hogs and Pigs Report.
“We’re really scratching our head on the breeding herd because
that number is below the lowest number analysts came up with,” said Len
Steiner, president of Steiner Consulting Group, Manchester, N.H.
As of Sept. 1, the USDA estimated the inventory of all hogs and
pigs at 68.36 million, up three-tenths of 1 percent compared to one year ago.
The number of market hogs totaled 62.546 million, also a three-tenths of 1
percent increase from the 2012 number.
For the market hogs by weight groups, the USDA reported 20.085
million hogs under 50 pounds, up nine-tenths of 1 percent from one year ago;
from 50 to 119 pounds, up 1.1 percent from last year at 18.087 million; 120 to
179 pounds at 13.284 million, an 1.5 percent increase from 2012; and for the
180 pounds and over, 11.090 million, a 3.5-percent increase from one year ago.
“They analysts were wrong in the other direction on the 50- to
119-pound and 120- to 179-pound categories,” Steiner said. “The USDA has
numbers on those two categories above the highest estimates that analysts ahead
of the report came up with.”
The analyst added that he has been struggling over the past six
weeks with the slaughter numbers compared to the estimates reported in the June
“Clearly this report indicates we’re going to pick up slaughter
and be above a year ago,” he said. “I think a couple of these numbers are suspect.”
With the smaller number of hogs in the heaviest weight category,
that implies slaughter rates from this point are going to come pretty close to
last year, said Dan Vaught, economist at Doane Advisory Service, St. Louis.
“And the lighter weight categories are all up, so the numbers
will move above last year’s in pretty short order, which could be pretty
difficult,” he said.
For farrowing numbers, the USDA estimated from June to August,
2.925 million, up nine-tenths of 1 percent from one year ago; for September to
November intentions at 2.9 million, a four-tenths of 1 percent increase
compared to 2012; and intentions during December to February at 2.87 million, a
nine-tenths of 1 percent increase from last year.
The June to August pig crop totaled 30.21 million, a 1.9-percent
increase from 2012, and the June to August pigs saved per litter was 10.33, an
increase of 2 percent from one year ago.
“With pigs per litter up 1 to 2 percent and farrowing intentions
for September to November at 2.9 million head, the potential pig crop is 29.88
million which would be a record over 2007 for that quarter,” said Lee Shulz,
extension livestock economist at Iowa
“And the December to February farrowing intentions is potentially another
record compared to the record last year.”
Steiner was surprised with the number of pigs per litter number.
“I think that is a little out of synch because of the porcine epidemic diarrhea virus and the
change to less gestation crates,” he said. “I thought the growth would be
slowed down, but it doesn’t seem to be the case.”
“I think the PEDV
situation is the reason so many analysts were looking for an unchanged figure
on the pigs saver per litter and for the size of the pig crop,” Vaught agreed.
“If the industry is
entering into an expansion phase, I believe the one thing that happens is
producers retain older sows that may be less efficient.” the economist
explained. “I tend to look for below-trend increases in the number of pigs saved
per litter, so that would dictate a number under a 1-percent increase, so to
have it 2 percent over one year ago was pretty surprising.”
“The markets are currently showing quite a bit of enticement for
expansion,” Steiner said. “For the next 12 to 18 months, the potential profits
are well above breakeven and domestic demand is strong.”
“We have seen very strong prices over the last three months, which
is going to encourage expansion, as is the decline in prices for feed since the
late April grain stocks report,” Vaught agreed.
“The industry was very aggressive in expansion in the mid-2000s
until 2007,” the economist said. “I believe there are quite a few hog barns
empty, and the industry is eager to repopulate those. It’s finding the right
circumstances, and I believe they’re pretty close to that.”
Based on the CME Lean Hog Index on a carcass basis, Vaught said,
he expects prices in the $86 to $90 range.
“For the first quarter of 2014, I’m looking for lows around $86
and the winter high in February around $92,” he said. “For the second quarter, prices
will range from $90 to $105, and for the third quarter, $103 to $92.”
Shulz reported his price predictions based on the Iowa-Southern
Minnesota series on a carcass base price. He is expecting for October to December
prices ranging from $85 to $88 and similar numbers in the first quarter of 2014
from $83 to $89.
“For the second quarter, I think the prices will range from $88
to $92 and in the third quarter from $82 to $88,” he added.
Steiner also based his price outlook on the Iowa-Southern
Minnesota series on a carcass base price.
“For the fourth quarter, prices will average $87.33 and at $86
for the first quarter of 2014,” he predicted. “For the second quarter, prices
will average at $90.70 and down to $88.70 for the third quarter.”