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April 1, 2013

 

US farmers boost hogs, pig production
 

 

US hog farmers are starting to expand production, a move that livestock analysts said will be bearish for hog prices.

 

This is according to USDA's quarterly Hogs and Pigs report.

 

US inventory of all hogs and pigs on March 1, 2013 was 65.9 million head, up 1% from a year ago but down 1% from December 1, 2012. Breeding inventory, at 5.83 million head, was up slightly from last year and up slightly from the previous quarter. Market hog inventory, at 60.1 million head, was up 2% from last year, but down 1% from last quarter.

 

While most of the report was in line with expectations, one number that did surprise analysts on a conference call after the report was the 2% increase in market hogs (and in particular those from 120 to 179 pounds). On average, analysts were expecting a less than 1% increase.

 

Livestock Marketing Information Centre Director Jim Robb called it "a turning point" and an indication that producers are starting to expand, which he called "bearish" for hog prices. "Producers are taking a measured approach to expansion, but they are expanding," he said.

 

Sterling Marketing President John Nalivka pointed out that even as pork producers have seen negative margins since last fall, corn prices have been lower than expected and hog prices have been higher than expected, fuelling the optimism borne out in the increased numbers seen in this report.

 

USDA's Grain Stocks and Prospective Plantings reports issued earlier on Thursday (Mar 28) also pointed to lower corn prices as existing corn stocks and acreage expected to be planted to corn this year both came in higher than expected.

 

"We can expect larger hog numbers going into the second quarter and beyond," said Victor Aideyan, senior risk management consultant at HISGRAIIN Commodities, noting the continued uptrend on pigs saved per litter as an indication that hog production efficiency continues to grow.

 

USDA reported the average pigs saved per litter were a record high 10.08 for the December-February period, compared to 9.97 last year. The report put the December 2012-February 2013 pig crop, at 29.0 million head, up 2% from 2012. Sows farrowing during this period totalled 2.88 million head, up 1% from 2012. The sows that farrowed during this quarter represented 49% of the breeding herd.

 

US hog producers intend to have 2.96 million sows farrow during the March-May 2013 quarter, down 1% from the actual farrowing during the same period in 2012, but up 1% from 2011.

 

According to the report, intended farrowing for June-August 2013, at 2.91 million sows, are down 1% from 2012, and down 1% from 2011.

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