Live Hog Prices Likely to Advance to The Low $50s
Second quarter hog slaughter projected down 5%.
John Otte
Published: Mar 25, 2009
On Friday, March 27 USDA will release the results of their latest survey of the U.S. swine inventory.
Ron Plain, University of Missouri economist estimates that the breeding herd is 1.9% smaller than a year ago, the market hog inventory is 3.9% smaller and the total herd is 3.7% smaller than on March 1, 2008.
Canadian imports plummet. Total slaughter of barrows and gilts was down nearly 2% during December-February due to a 65% drop in imports of slaughter hogs from Canada. Slaughter of U.S. raised hogs was a bit higher than expected based on USDA's December inventory report. Any revisions that USDA makes to their December inventory estimates are likely to be small.
Numbers producers supplied USDA for the December inventory report suggested December-February farrowings would be 3.3% smaller than a year earlier and March-May farrowings would be down 1.6%.
"I'm predicting winter farrowings actually were down 3.5% and spring farrowings will be down 2.0%," says Plain. "I'm forecasting summer farrowings will be down 1.0% compared to June-August 2008."
Why are farrowing reductions shrinking?
"Declining feed prices in the second half of 2008 halted what had been a rapid reduction in the sow herd," he explains. "December-February, sow slaughter was 7.4% lower than a year ago."
More pigs per litter, but smaller pig crop. "I'm estimating that pigs per litter were up 2.4% this winter, as the measure was in the two previous quarters," says Plain. "My estimate is the December-February pig crop is 98.9% of a year earlier. Feeder pig imports during December-February were 35% below last winter's level, so the light weight market hog inventory should be down considerably more than the fall pig crop."
Plain's estimates of the March 1 market hog inventory by weight groups are:
- 180 pounds and heavier 97.6% of a year ago
- 120 to 179 pounds 95.5%
- 60 to 119 pounds 95.0%
- Under 60 pounds 96.4% of a year earlier.
"My estimate of hogs in the 60 to 179 weight groups implies that second quarter daily hog slaughter will be more than 5% below year-ago levels, if the inflow of slaughter hogs from Canada continues to be down," says Plain. "I expect live hog prices to average close to $52 per cwt ($68.50 per cwt carcass) in the second quarter of 2009.
Plain expects hog slaughter during the third quarter of 2009 to be 4% lower than the number slaughtered in July-September 2008. If so, look for third quarter 2009 hog prices to average close to $53 on a live basis and $70 on a carcass basis.
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Tagged: usda, live hog prices, gilts, sow herd, barrows
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