WASHINGTON — The most recent U.S. Department of Agriculture
hogs and pigs report shows that porcine diarrhea epidemic virus adversely
affected the U.S. hog herd.
Numbers were markedly down and lower than analysts predicted
in several categories in the Dec. 27 report, the last pork report for the 2013
Analysts who spoke during a National Pork Board-sponsored
media call said that the effects of the virus, which emerged in the U.S. herd in
April and May, is starting to show up in several categories.
All hogs and pigs on U.S. farms as of Dec. 1 was at 65.94
million, down 0.7 percent from a year ago. The breeding herd stood at 5.757
million, down 1.1 percent from a year ago.
That number, which analysts predicted would be up 1 percent,
was the largest deviation from pre-report expectations, said Steve Meyer,
president of Paragon Economics, who read the numbers.
The marketing herd was at 60.183 million, down 0.6 percent.
Pre-report estimates had it down 0.2 percent.
In the weight categories, pigs under 50 pounds were at
19.049 million, down 1.3 percent and lower than pre-report expectations of down
1 percent; 50 to 119 pounds — 16.669 million, down 0.5 percent, close to the
down 0.3 percent of pre-report expectations; 120 to 179 pounds — 12.626 million,
down 0.1 percent, even with pre-report estimates; and 180 pounds and over —
11.838 million, down 0.3 percent, lower than pre-report estimates of up 0.1
September-November farrowings stood at 2.882 million, down
0.2 percent, 0.6 percent lower than pre-report estimates; December-February
intentions were at 2.825 million litters, up 1.3 percent from a year ago and
higher than analysts expected with 0.9 percent; and March-May intentions were at
2.855 million, up 1.4 percent from a year ago and analysts had that up 1.2
The September-November pig crop was at 29.298 million, down
0.1 percent and much lower than analysts predicted of up 1.2 percent.
“Does it tell us anything about this PEDV virus that is
having a major impact on pork producers, and we think it does,” said Alton Kalo,
chief economist with Steiner Consulting Group in Manchester, N.H.
Death-Loss Ratio Rises
Kalo said a few quick math equations show that the
death-loss ratio since the Sept. 1 report has gone up considerably.
“We use a death-loss ratio. In the past, our rule of thumb
is a 2.5 percent death-loss ratio to the overall supply. When we look at it for
this quarter, that ratio is at 4 percent, so we’re thinking the death-loss ratio
number that this report implies is significantly higher than it has been in
previous quarters,” he said.
Kalo said that using those calculations, it appears that
there were about 1.451 million pigs that didn’t come to market that normally
would have been marketed.
“I think that number is somewhat consistent with other
estimates that are put out there, that various models are suggesting as far as
the impact of the disease,” he said.
Another category that traditionally has set records and is a
major indicator of productivity is the pigs saved per litter number. For the
fourth quarter, the pigs saved per litter was at 10.16 pigs per litter, about
even with the same time a year ago and smaller than the 0.8 percent increase
that analysts predicted.
“It’s flat right now, and our thinking is it’s probably
going to be flat for the next couple of quarters, as well, given that the
disease is only spreading,” Kalo said.
But another factor also may have affected those numbers,
that being the short feed supplies and high grain costs that occurred as a
result of the 2012 U.S. drought.
“Much of the revisions have to do with the survey didn’t
recognize the full impact of the spike in feed costs and how that affected
producers as they were making decisions for 2013. Certainly, the spike in feed
costs in August 2012, the full 2012 numbers in terms of planning and supplies
coming to market in the spring of 2013 got impacted mostly because of the spike
in feed costs more than anything else,” Kalo said.
Bob Brown, an independent commodity analyst from Edmond,
Okla., noted that the report contained several revisions that also could
indicate some major impacts.
“There was a big revision in the March-May pig crop, down
almost 1.1 million from the previous report. They had reported at 30.111
million, which was the highest pig crop ever reported for any quarter in the
U.S., and they drew that down about one million to 29.026 million,” he said.
Brown also noted that there were revisions to May 2013
“For May 2013, they revised the pig crop in May 379,000
head, so something was going on pretty momentous during that time period, and
now they’re picking it up. The fear is in the industry is that it’s
accelerating,” he said.
Brown said the numbers may indicate how the USDA intends to
reflect the PEDV losses going forward.
“USDA does the best job they can. My questions always were —
were they counting the pig crop and then the pigs die and so it should show up
in the death losses or are they going to show it in the pig crop itself and it
looks like now they are trying to show the impact in the pigs per litter, which
means in the pig crop itself. Going forward, that’s the number we’ll look at,
those productivity measures that we have always kept a strong eye on lately
because they’ve been really driving gains in total tonnage, in total pork
tonnage,” he said.
PEDV is not transmissible to humans and nor would it appear
in any pork products, but Kalo said the virus may impact the long-term picture
by limiting supplies of pork in the summer.
“We haven’t seen the PEDV virus’s true impact come into the
marketplace yet. The futures markets are a measure of what the thinking is of
the people who are out there putting their money on the line and betting on the
future and the real fear and concern is what is going to happen with supplies
next summer,” he said.
“If we’re having these losses from PEDV that have escalated
in the last two months, they’re going to hit the market in the summer, when
supplies are seasonally lower.”
Meyer said a factor affecting higher pork prices in the meat
case likely is a result of higher grain prices in 2012 and not PEDV.
“The losses from PEDV have not had a chance to filter all
the way through even to the price of pigs yet, in my opinion. The timing is not
right. The reason you’ve seen record prices for pork through October is because
of the impact of the longer-term impact of the shift in corn and soybean prices
that were driven largely by biofuels policy and then, of course, the short crop
in 2012 has had an impact on that, too,” he said. “The higher prices for meats
across the board and pork in particular have nothing to do with PEDV.”
The analysts gave price predictions for 2014:
* Brown, using CME-equivalent prices: first quarter — $87
per hundredweight; second quarter — $95 per hundredweight; third quarter — $98
to $99 per hundredweight; and fourth quarter — $90 per hundredweight; and
* Kalo, using Iowa-Minnesota market prices: first quarter —
84 cents per pound; second quarter — 97 cents per pound; third quarter — 96
cents per pound; and fourth quarter — 80 cents per pound.