January 6, 2010

 

US remain optimistic amid lower hog inventories

 

 

Several US experts and industry leaders have voiced moderately positive hog inventory outlooks for 2010 despite a 2% decrease from 2008 and September 1, 2009.

 

According to US Department of Agriculture (USDA) figures, national inventory of all hogs on December 1, 2009 was 65.8 million heads.

 

The US' main pig production state, Iowa, saw its population drop by 400,000 from September to 19.3 million. About a year ago, the state had 19.8 million hogs. Second-place North Carolina reported 9.7 million heads.

 

USDA said hog producers intend to have 2.95 million sows farrow during the December 2009-February 2010 quarter, down 2% from actual farrowings during the same period in 2009 and down 4% from 2008.

 

Intended farrowings for March-May 2010, at 2.94 million sows, are down 3% from 2009 and down 4% from 2008.

 

Sam Carney, president-elect of the National Pork Producers Council (NPPC) and other pork industry leaders have been urging greater reduction in swine herds to bring production in line with demand.

 

Pig producers have suffered losses for two years due to high feed costs, a drop in exports and a reduction in demand caused by the AH1N1 virus scare earlier this year.

 

USDA has given hog producers some help by purchasing US$162 million worth of surplus pork during the last year.

 

Economists have said the US needs to reduce its pig herd by as much as 10% for supply and demand to come into profitability for hog producers. A drop in wholesale prices of as much as 18% enabled retailers to offer discounts for hams during the festive season, which boosted sales.

 

Purdue University Extension economist Chris Hurt expects US hog producers should break even in 2010 as both the average price received and the total cost of production are expected around US$50 per hundredweight.

 

Hurt forecast first quarter live hog prices 'in the higher US$40s per hundredweight' followed by 'the low US$50s' in the second quarter, 'nearly US$50' in the third quarter and 'in the mid-to-higher US$40s' in the fourth quarter.

 

He put total costs of production, including feed, labour and full depreciation of buildings and equipment at US$50 to US$51 per hundredweight.

 

The US futures board also contains some optimism for hog producers. The February price on the Chicago Board of Trade was recently US$65.20 per hundredweight and prices rising up to over US$77 in June.