By DOUG SCHMITZ

Iowa Correspondent

DES MOINES, Iowa — Record hog and pig inventories are continuing to increase well into 2018, according to the Dec. 1 USDA Quarterly Hogs & Pigs report.

“The December-February pig crop has been revised down to match up to hog slaughter capacity,” said Bob Brown, livestock market consultant in Edmond, Okla. “Pigs per litter continues to grow, and is at a record high with 10.8 pigs born per litter in November, the single highest month ever.”

Brown joined Jim Robb, director of Livestock Marketing Information Center in Lakewood, Colo., and Chris Hurt, Purdue University professor of agricultural economics, in analyzing the report released Dec. 22, 2017. It stated U.S. inventory of all hogs and pigs on Dec. 1 was 73.2 million head, up 2 percent from Dec. 1, 2016, but down slightly from Sept. 1, 2017.

Hurt said the U.S. pork industry continues to see growth, both domestically and internationally, to help support the 2 percent increase. “In 2017, there was 2.5 percent more pork on the market. Thankfully, we’ll continue to see an increase in demand,” he said.

The report said Iowa hog producers had the nation’s largest inventory, at 22.8 million head, a record high up 3 percent from the previous year. North Carolina and Minnesota had the second- and third-largest inventories, with 9 million and 8.5 million, respectively.

The report said Illinois’ inventory of all hogs and pigs on Dec. 1 was 5.35 million, down 1 percent from Sept. 1 but up 5 percent from the previous year. Indiana’s total hog and pig inventory was estimated at 4 million, down 100,000 from a year earlier.

Michigan’s total hog and pig inventory was estimated at 1.18 million, up 50,000 from a year ago. Ohio’s inventory was estimated at 2.9 million, up 200,000 animals from a year ago. (Kentucky and Tennessee weren’t included in the report.)

The report said the U.S. breeding inventory, at 6.18 million pigs – the highest numbers since 2007 – was up 1 percent from last year and up 1 percent from the previous quarter. In September 2017, 11.37 million were born, compared to 10 million born 10 years earlier.

Hurt said pigs per litter reached another record in 2017 at 10.59, a 0.9 percent increase for the year and “a remarkable 15 percent improvement over the past decade.

“There was some indication that producers will expand more rapidly in 2018 than the 1 percent larger breeding herd,” he explained. “Farrowing intentions this winter were up 3 percent, followed by a 2 percent increase in the spring quarter. If producers follow through, this will increase pork production more rapidly in the last half of 2018.”

The report added U.S. market hog inventory, at 67.1 million, was up 2 percent from last year, but down slightly from last quarter. Hurt said pork production is expected to rise by 3 percent in the first half of 2018 and by nearly 4 percent in the second half.

“The theme for the pork market in 2017 was higher production and higher prices, as pork production rose by 2.5 percent and hog prices were up 10 percent,” he said. “The reason was strong pork demand around the world. That was led by bacon demand in the U.S., where retail prices and pork exports both increased by about 7 percent.”

New plants aid production

Steve Meyer, vice president of pork analysis for Express Markets, Inc. (EMI) Analytics in Fort Wayne, Ind., said the opening of pork plants in Missouri, Minnesota and Iowa has helped tremendously with increased production.

“None of these plants are at full capacity yet and when they are, it will help keep marketings current,” he said.

In November, Meyer said another plant is expected to open in Iowa, adding this should have an effect on margins for hog producers and market prices.

The report said September-November 2017 pig crop, at 33.4 million head, was up 3 percent from 2016. Sows farrowing during this period totaled 3.11 million, up 2 percent from 2016, with sows farrowed during this quarter representing 51 percent of the breeding herd.

Robb said the farrowing increase for September to December was more than expected, causing fellow analysts to increase slaughter numbers for March to May. “We will be asking consumers to eat as much meat as they have since 2007.”

The report said the average pigs saved per litter was a record high of 10.74 for the September-November period, compared to 10.63 in 2016. Pigs saved per litter by size of operation ranged from 7.9 for operations with 1-99 hogs and pigs to 10.8 for operations with more than 5,000.

In addition, U.S. hog producers intend to have 3.07 million sows farrow during the December-February 2018 quarter, up 3 percent from actual farrowings during the same period in 2017 and up 5 percent from 2016. Intended farrowings for March-May, at 3.08 million sows, are up 2 percent from 2017 and 4 percent over 2016.

Hurt said live hog prices are expected to be higher in 2018, according to the current lean futures market.

“Live hog prices are expected to average around $53 in 2018, compared to about $51 in 2017,” he said. “Prices are expected to be in the low $50s in the first quarter and then move up seasonally to average in the higher $50s for the second quarter, then back to the mid- to higher $50s for the third quarter, and finish the year in the mid- to higher $40s.”

Based on the nationally based carcass price, Robb expects prices to end up $63-$64 per cwt. for the fourth quarter of 2017. For 2018, he forecast $64-$67 per cwt. for the first quarter, $69-$73 for the second quarter, $70-$75 for the third quarter and $55-$61 for the fourth quarter.

“While prices are expected to be down overall in 2018 compared to 2017, we should still see some profitability for pork producers in 2018,” he explained.

Moreover, Brown said a 5-10 percent increase in pork exports is needed per year to keep up with the continuing increase in U.S. pork production, adding exports are especially important to Mexico, South Korea and Central America.

The total number of hogs under contract owned by operations with more than 5,000 head, but raised by contractors, accounted for 47 percent of the total United States hog inventory, unchanged from the previous year.