On December 27, USDA will release the results of their latest survey of the U.S. hog inventory. Ron Plain, University of Missouri economist, calculates the breeding herd is 1.0% larger than a year ago and the market hog inventory is 1.1% larger than on Dec. 1, 2005.
"These are very small increases given hog producers have experienced 34 consecutive profitable months," says Plain. "I believe the huge run up in corn prices this fall has halted breeding herd growth. U.S. sow slaughter during September-November was up 4.1% compared to last fall, despite slightly fewer sows being imported for slaughter from Canada compared to the same months of 2005."
Farrowing growth slows. For the September Hogs and Pigs Report producers told USDA that they would boost September-November farrowings 0.9% larger than in 2005. Plus they intended to hike December–February farrowings by 2.2%.
"I expect slightly lower numbers in this report with fall farrowings up 0.8% and winter farrowings 2.1% larger than a year ago," says Plain. "My forecast is spring farrowings will be equal to the number farrowed in March-May 2006."
Plain thinks pigs per litter in fall 2006 farrowings rose by 0.7%, making the September-November pig crop 101.5% of a year ago. Feeder pig imports from Canada were up 11% this fall, so the lightweight market hog inventory could be up a bit more than the pig crop implies.
Plain's estimates of the December 1 market hog inventory by weight groups are:
* 180 pounds and heavier 100.2%,
* 120-179 pounds 101.0%,
* 60-119 pounds 101.2%
* under 60 pounds 101.5% of a year earlier.
Hog slaughter since December 1 is down compared to the same days last year. Hog slaughter during the next two to three weeks will need to average 1.1% above year-ago levels to make Plain's estimate of the 180 pound plus inventory group correct.
First quarter hog slaughter to rise. "My estimate of the number of hogs in the 60-179 pound weight groups implies that first quarter hog slaughter will be 1.1% above year-ago levels, assuming the inflow of slaughter hogs from Canada continues close to year-ago levels," says Plain. "I expect live hog prices to average in the mid $40s in the first quarter of 2006."
"If my estimate of the lightweight inventory is correct, second quarter 2007 hog slaughter should be 1.5% larger than the number slaughtered in April-June 2006," he adds. "If so, look for spring hog prices to average close to $48 on a live basis, down only slightly from a year earlier."