Preview of USDA Hog Inventory Report

Plain predicts breeding herd down, market herd up, prices in the mid- to upper-40s.

On March 28 USDA will release the results of its latest survey of U.S. swine producers.

"My calculations indicate the breeding herd is 1.0% smaller than a year ago," says Ron Plain, University of Missouri economist. "But the market hog inventory is 4.9% larger. Plus the total herd is 4.3% bigger than on March 1, 2007."

Plain expects USDA to revise upward estimates contained in last December's report.

"Hog slaughter during December-February was much higher than expected based on the December inventory report," he says. "A 30% rise in slaughter hog imports from Canada explains only part of the difference. Winter slaughter of U.S. raised hogs was 4.5% higher than the December report implied. The new circovirus vaccine is reducing death loss which may explain most of the extra slaughter."

Expansion far from ending. In December, producers told USDA they'd up December-February farrowings by 2.4%. But they'd only boost March–May farrowings by 0.1%.

"I think winter farrowings were actually up 2.5% and I believe spring farrowings will be 1.0% larger than last year," says Plain. "I’m forecasting summer farrowings to be down 0.5% compared to June-August 2007. Producers are losing lots of money and winter sow slaughter was 3.3% higher than a year ago."

Productivity gains continue. "I’m estimating pigs per litter were up 0.7% this winter, making the December-February pig crop 103.2% of a year ago," says Plain. "Feeder pig imports from Canada were up 30% this winter, so the lightweight market hog inventory should be up 1% or so more than the pig crop implies."

Plain's estimates of the March 1 market hog inventories by weight groups are:
* 180 pounds and heavier 106.0%,
* 120-179 pounds 105.1%,
* 60-119 pounds 105.0%
* under 60 pounds 104.2% of a year earlier.

Plenty of hogs to keep pressure on prices. "My estimate of hogs in the 60-179 weight groups implies that second quarter hog slaughter will be 6% or so above year-ago levels, if the inflow of slaughter hogs from Canada continues to be above year-ago levels," he says. "Second quarter live hogs could average near $47 per cwt.

Plain expects third quarter 2008 hog slaughter to be nearly 5% larger than the number slaughtered in July-September 2007. "If so, look for third quarter 2008 hog prices to average close to $46 on a live basis," he says.

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