October 16, 2007

 

US hog inventory larger than expected

 

 

US inventory of hogs and pigs on Sept. 1, 2007, was 64.65 million head - up 2.8 percent on-year according to September's Quarterly Hog and Pigs report  released by the USDA.

 

The number was 0.7 percent higher than pre-report estimates of 2.1 percent by Dow Jones, according to Farm and Ranch Guide.

 

The June-August 2007 pig crop was estimated at 27.452 million head - up 3.5 percent from a year ago, and was 1.2 percent above pre-report estimates.

 

Fourth quarter slaughter is likely to be 29 million, said Glenn Grimes, University of Missouri professor emeritus and Extension marketing specialist.

 

In October, slaughter is expected to be 10 million, a first for the US, he said.

 

Grimes spoke to Farm and Ranch Guide and the media via a teleconference sponsored by the Pork Checkoff.

 

Grimes said that fourth quarter slaughter would be about 4.7 percent higher than last year.

 

He hopes finishing pigs with 51-52 percent lean will bring cash prices of US$40-US$44/pound live weight and US$57-US$61/pound carcass weight.

 

Sept. 1 US breeding herd stands at 6.145 million head - up 1.1 percent from a year ago. Analysts expected that number to be up 0.8 percent.

 

The marketing hog inventory stood at 58.5 million head - up 2.9 percent. Pre-report estimates averaged 2.3 percent.

 

The number of pigs in all 3 weight categories ( 60 pound, 60-119 pounds, 120-179 pounds) were about 2.8 percent above year-ago levels, and all were slightly higher than pre-report estimates.

 

Jim Robb, Livestock Marketing Information Center director in Lakewood, Colorado, said that overall, the increased hog numbers from the report did correspond with slaughter numbers for September, increasing its validity.

 

During the first quarter of 2008, Grimes expects a US$42-US$47/price live weight and US$59-US$63/pound carcass weight.

 

Grimes said that demand for US pork for the first eight months of 2007 was up 1.9 percent from year-ago levels, with most of the increase coming from the domestic market.

 

He added that almost all the increase in retail prices were passed on to hog producers during the period.

 

Although the reason is unclear, September was clearly a month of larger-than-anticipated hog slaughter, Robb said.

 

A 5 percent on-year increase in US pork production is possible, he said. This would come at a time of declining beef producton. However, the drop in beef supplies would be more than made up for by increased pork and chicken supplies, two sectors which has seen increased profitability.

 

Although chicken production is expected to remain profitable, pork production is expected to draw losses in the last quarter of 2007 and first quarter of 2008 due to high feed costs and lower pork cash prices.

 

In Iowa, the nation's largest pig-farming state, pig operations have been profitable for 42 of the past 43 months.

 

Most hog enterprises operated in the negative for January 2007, and will likely show a small profit for September 2007.