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Pork leaders: 2013 prices up, but shortage not likely
 
By DOUG SCHMITZ
Iowa Correspondent

CLIVE, Iowa — Despite the continuing drought and high production costs that have taken a toll on U.S. pork, the recent media hype created over a report of a possible pork shortage is just a lot of baloney, according to industry experts.

“There have been reports of losses as high as $50 a head,” said Ron Birkenholz, communications director at the Iowa Pork Producers Assoc. “Producers are currently scaling back production to offset record-high input costs, with farrowing intentions lower now through February of 2013.”

But despite the cutbacks, Birkenholz said consumers should have no fears about a possible U.S. pork shortage. “Pork and bacon lovers could encounter higher retail prices next year,” he said, “but there should be ample supplies.”

In fact, according to the USDA’s latest Quarterly Hogs & Pigs report, released Sept. 28, last month’s U.S. hog numbers were slightly up from this time last year and up 3 percent from June’s inventory.
“In general, the report was more bullish than the pre-release trade predictions,” especially with hog futures and 2013 hog prices, said Ron Plain, University of Missouri professor of agricultural economics and extension agricultural economist.

Plain joined Dan Vaught, president of Vaught Futures Insight in Altus, Ark., and Altin Kalo, chief economist of Steiner Consulting Group in Manchester, N.H., in a Sept. 28 conference to address the report. It stated the U.S. inventory of all hogs and pigs on Sept. 1 was 67.5 million head, up slightly from the Sept. 1, 2011, 66.6 million head and up 3 percent from June 1’s 65.8 million head.
As the nation’s leading hog producer, Iowa had 20.6 million hogs and pigs, up over 2 percent from a year ago, becoming the highest inventory on record.

The report also said the U.S. breeding inventory, at 5.79 million head, was down slightly from last year, and down 1 percent from the previous quarter. “It’s dramatic, going from a breeding herd that was up 1.1 percent (from 2011 levels) in June, to down 0.3 percent now,” Kalo said. “They don’t turn on a dime.”

Because of productivity gains with another record 10.13 pigs per litter, however, Vaught said the breeding herd would have to be cut more to reduce market hog numbers. “I think we’ll see continued gains in pigs per litter as producers get rid of their least-productive sows, and apply more attentive management on the pigs they do have,” he said.

But cutting production won’t necessarily bring back productivity, he added: “We’d have to see a 2 to 3 percent cut in the breeding herd” for profitability to return by late 2013.

The report also said U.S. market hog inventory, at 61.7 million head, was up slightly from last year, and up 3 percent from last quarter, which Plain said “implies that fourth-quarter hog slaughter will be close to last year’s level and slaughter during the first-quarter of 2013 will be down 0.5 percent.”

Moreover, the June-August 2012 pig crop, at 29.3 million head, was down slightly from 2011, the report showed. Sows farrowing during this period totaled 2.89 million head, down 1 percent from 2011; the sows farrowed during this quarter represented 49 percent of the breeding herd.

The average pigs saved per litter was at a record high 10.13 for the June-August period, compared to 10.03 last year, the report said. Pigs saved per litter by size of operation ranged from 7.6 for operations with 1-99 hogs and pigs, to 10.2 for operations with more than 5,000 hogs and pigs.

“The annual growth rate of 1 percent is larger than last quarter’s 0.6 percent but still well below the 2008-2011 trend of 2 percent,” said Steve Meyer and Len Steiner in their Oct. 1 CME Daily Livestock report. “Economic hard times and liquidation will very likely increase the rate of growth again by eliminating poorer-performing sows.”
The report also stated U.S. hog producers intend to have 2.85 million sows farrow during the September-November 2012 quarter, down 3 percent from the actual farrowings during the same period in 2011, and down 1 percent from 2010.

“Nationally, fewer sows farrowed, but total inventory slightly increased,” Birkenholz said. “Production efficiency continues to improve and hog farmers continue to do more with less.”
Intended farrowings for December-February 2013, at 2.82 million sows, are down 1 percent from 2012 and down 1 percent from 2011, the report said. “Today’s farms can produce 1,000 pounds of pork with only five pigs from breeding to market, compared with eight pigs in 1959,” Birkenholz said.

Regarding prices, Chris Hurt, Purdue University extension agricultural economist, said producers are selling hogs about three pounds lighter, which “are likely to continue and will help ease pork supplies as long as corn and meal prices stay high.

“Large losses still loom over the industry for the next six months,” he said. “Live hog prices are expected to be in the mid-to-higher $50s for the final quarter of the year and then improve to the low-to-mid $60s in the first quarter of 2013.”

To see the full report, visit www.usda. gov/nass/PUBS/TODAYRPT/hgpg0912.pdf
10/10/2012