January 5, 2005

US Hog Figures Constant In 2004

Hog producers across the country say they have not expanded their breeding herds and will keep farrowings at about a constant level in coming months. That's from the latest USDA Hogs and Pigs report.

"The report demonstrates the unwillingness of pork producers to increase the sizes of their herds," said Chris Hurt, Purdue University Extension Economist. "Since 2000, annual farrowings have been nearly steady at 11.4 or 11.5 million sows."

The current numbers reported by the USDA last week were a surprise to the market, which felt that very good profits since the spring of 2004 would cause breeding herd expansion.

"There are several reasons why expansion is not occurred. First is that some producers likely used the much improved hog prices in 2004 as an opportunity to finally leave the industry," said Hurt.

He says breeding herd numbers were down by 3 percent in Indiana, Ohio, North Dakota, and South Dakota, and by 4 percent in Nebraska. They were also lower in Georgia by 12 percent; Kentucky by 11 percent; and Tennessee by 8 percent. These declines were largely offset by higher breeding herd numbers in Iowa and Illinois which increased by 1 and 2 percent respectively. North Carolina, Minnesota and Missouri remained unchanged.

"These numbers signal a shift in production from the states with declining numbers to those with increasing numbers," he said.

A second reason that expansion is not yet showing up is that it remains very early in the profit cycle for expansion.