By DOUG SCHMITZ
Iowa Correspondent

EDMOND, Okla. — The U.S. pig count of 66.1 million is down 2 percent since June 1, while Iowa hogs increased by 200,000 head from a year ago to 19.6 million, despite a near 40 percent dip in hog prices over the previous 12 months, according to the USDA’s latest Quarterly Hogs & Pigs Report.

“If you look at all the sources, it looks like most of the decline in the market hog numbers came from a decline in the feeder pig imports in Canada,” said Bob Brown, an independent market analyst from Edmond, Okla.

For about the first five months in 2009, Brown said Canadian feeder imports were down about 800,000 head because the U.S. pig crop numbers stayed relatively unaffected.

However, the low feeder pig imports from north of the border also reflected a decline in U.S. hog slaughter.

“The March-May report was down three-tenths of 1 percent, or 83,000 head from a year ago,” Brown said. “The last six weeks of slaughter in the U.S. of federally inspected total hog slaughter is down 1.2 percent from a year ago.

“Now, a year ago, if you would have told me that, I would have said it’s easily down 5 percent, given the horrendous market conditions that we had a year ago,” he added.

Funded by the Pork Checkoff at the National Pork Board (NPB) in Clive, Iowa, Brown joined Steve Meyer of Paragon Economics in Des Moines; Victor Aideyan, risk management consultant for HISGRAIN Commodities, Inc. in London, Ontario, Canada; and Ron Plain, professor of agricultural economics at the University of Missouri-Columbia, in a June 29 teleconference with U.S. farm reporters.
Although U.S. hog slaughter was down 1.2 percent from 2008, Brown said total pork production has been up 1 percent, due to weights per head holding at record highs.

“With the 4-400 nightmare ($4 corn and $400 meal), you would think hog weights might come down a little bit, but obviously, they have not,” he said. “In fact, they’re the highest they’ve ever been. So we actually have more pork tonnage than we did a year ago.”
Moreover, the June 1 report said the U.S. breeding inventory, at 5.97 million head, was down 3 percent from 2008, and down slightly from the previous quarter.

“The breeding herd, at 5.967 million, is not much shrinkage, compared to the March 1 numbers,” Aideyan said. “Since June 1, they have been anecdotal evidence that there’s been an acceleration – when the numbers first came out – in the sow reduction.

“Looking up sow prices since June 1, we do see a sharp drop in the kinds of prices that have been offered for sows – usually an indication that the sow buyers are not having any trouble finding supply for their line,” he said.

The USDA also said the U.S. market hog inventory, at 60.1 million head, was down 2 percent from last year but up 1 percent from last quarter.

With the March-May 2009 pig crop, at 28.5 million head, down slightly from 2008 but up 2 percent from 2007, the report said sow farrowing during this period totaled 2.97 million head, down 3 percent from 2008 and down 2 percent from 2007.

“The hog industry has been having a tough time of it,” Plain said. “[There’s] a lot of red ink out there. Most calculations indicate that producers have lost money – somewhere around 18 of the last 20 months. We’re needing to downsize the swine herd and get higher prices.”

But Plain said the U.S. breeding herd has been down for the last several quarters.

In fact, the USDA said pigs saved per litter by size of operation ranged from 7.40 for operations with 1-99 hogs and pigs to 9.70 for operations with more than 5,000 hogs and pigs.
“We’ve farrowed pure sows but productivity is offsetting a big chuck of that,” Plain said.

“If we look at pigs per litter, the March-May quarter at 9.61 pigs saved per litter is up 2.5 half from a year ago. In the pig crop, we are cutting back, but this is an awfully slow rate of reduction.”
As a result, the USDA said U.S. hog producers intend to have 2.97 million sows farrowed during the June-August 2009 quarter, down 3 percent from the actual farrowings during the same
period in 2008 and down 5 percent from 2007.

“Intended farrowings for September-November 2009, at 2.96 million sows, are down 2 percent from 2008 and down 7 percent from 2007,” the USDA said.

The USDA added that the total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 46 percent of the total U.S. hog inventory, up from 41 percent last year.

Forecasting price into 2010, Brown, said “the demand will rally from here and will continue to take out production at a very slow pace.”
Brown predicted $60 CME lean average for the third quarter of 2010, compared to 78.5 a year ago, with $65 in the fourth quarter, compared to about 58 a year ago.