May 19, 2008

US hog imports to peak in 2008 before 2009 slowdown

US packers and feeder pig finishers are expected to set another record by importing 10.4 million head of swine this year, 5.4 percent above the previous record in 2007, according to the USDA.

Year-over-year increases in 2008 are expected to take place in the first half of the year, before turning year-over- year lower in the second half and continuing to decline through 2009.

Live swine imports next year are expected to be 9.6 million head, almost 9 percent below the import forecast for this year.

Lower swine import forecasts for the second half of 2008 through 2009 are largely due to the contraction of the Canadian inventory.

Reductions in the breeding herd appeared just recently to develop some traction. Agriculture Canada reported 4.58 percent fewer sows and bred gilts on April 1, 2008, a continuation of a slow contraction that began in Canada in April 2005. The biggest difference in Canadian breeding herd changes between April 2005 and April 2008 was the very large decline last month of almost 8 percent in the major pork-producing province of Ontario.

Factors that caused the slide in Canadian production included a stronger Canadian dollar, higher feed costs and the Country of Origin Labeling (COOL) law in the United States which is scheduled to be implemented on October 1, 2008.

As a result, USDA's forecast for 2008 commercial pork production was lowered fractionally by 52 million pounds due to expectations of somewhat slower imports for the remainder of the year.

Pork production this year is expected to be 23.5 billion pounds, 7 percent above 2007.

Second-quarter 2008 prices of live equivalent 51-52 percent lean hogs will likely average between US$46 and US$48 per cwt. For the year, prices are expected to average between US$43 and US$45 per cwt, almost 7 percent below last year.