By Doug Schmitz
DES MOINES, Iowa – A smaller than projected market hog inventory put a positive spin on hogs for 2021. It was a very profitable year for U.S. producers, according to Ron Plain, University of Missouri emeritus professor of agricultural economics, analyzing the Dec. 1 USDA Quarterly Hogs & Pigs Report, released Dec. 23.
“The USDA said market hog numbers were down 4.4 percent, on the first day of December,” he said. He added this was 1.5 percent smaller than the trade was expecting.
“Not a whole lot of hogs out there, and with respect to what it means for prices, when you have fewer hogs than the trade was guessing, (there’s) a good chance we may see some upward movement in lean hog futures when they open next,” he added.
Plain analyzed the report alongside Steve Meyer, Partners for Production Agriculture economist in Ames, Iowa; Bob Brown, an independent market analyst in Edmond, Okla.; and David Miller, Decision Innovation Solutions chief economist in Urbandale, Iowa, in a Dec. 23 teleconference with reporters.
Sponsored by the National Pork Board and the Pork Checkoff in Des Moines, Iowa, the report said the United States inventory of all hogs and pigs on Dec. 1, 2021, was 74.2 million head, down 4 percent from Dec. 1, 2020, and down 1 percent from Sept. 1, 2021.
The report said the U.S. breeding inventory, at 6.18 million head, was up slightly from last year, but down slightly from the previous quarter. Market hog inventory, at 68 million head, was down 4 percent from last year, and down 1 percent from last quarter.
The report added for the under-50-pounds weight category, there were 21.17 million head, down 3.7 percent from last year. In the 50-to-119 pounds group, there were 19.18 million head, down 2.5 percent, and very close to what analysts expected.
In addition, there were also some significant differences in the heavyweight categories from pre-report expectations, with 14.8 million head in the 120-to-179-pounds group, down 6.2 percent, with analysts saying that would be down 3.8 percent.
“In general, a tight supply of hogs for the next five months, and likely some pretty good prices for producers as a result of that,” Plain said.
He said pigs per litter was up 1.3 percent in the fourth quarter, which is the biggest increase since December through February of 2019.
“Productivity, which was strong for a number of years, adding almost 1 percent more pigs to the pig crop just because of more pigs per litter, has for the last several years, been inching closer to zero,” he said. “So, a 1.3 percent increase is a pretty hefty increase in productivity.
“If that continues to carry forward in subsequent farrowing periods, it may add more pigs to the hog supply without having to have more sows,” he added.
For the 180-and-over group, there were 12.85 million head, down 6 percent, with analysts expecting that number would be down 3 percent.
“If you look at actual slaughter – total daily slaughter on the equal number of weekdays and Saturdays this year versus a year ago – that number was down 5.4 percent, so not too far off from where the 180-and-over was,” Meyer said.
The report said the United States hog producers intend to have 2.94 million sows farrow during the December 2021-February 2022 quarter, up slightly from the actual farrowings during the same period one year earlier, but down 8 percent from the same period two years earlier.
Intended farrowings for March-May 2022, at 3.01 million sows, are down 1 percent from the same period one year earlier, and down 4 percent from the same period two years earlier. The total number of hogs under contract owned by operations with over 5,000 head accounted for 47 percent of the total United States hog inventory, down 1 percent from the previous year, the report said.
The report added Iowa hog producers had the nation’s largest inventory, at 23.8 million head, down 1 percent from the previous quarter, and down 3 percent from the previous year; Minnesota had the second largest inventory at 8.9 million head; and North Carolina was third with 8 million head.
The report said Illinois’ total inventory of all hogs and pigs on Dec. 1, 2021, was 5.35 million head, down 1 percent from Sept. 1, 2021, and down 2 percent from last year. Breeding inventory, at 590,000 head, was down 70,000 from the previous quarter, but up 40,000 from last year. Market hog inventory, at 4.76 million head, was up slightly from last quarter, but down 3 percent from last year.
Illinois’ September-November 2021 pig crop, at 2.68 million head, was down 17 percent from 2020. Sows farrowing during this period totaled 250,000 head, down 50,000 from a year ago.
In Indiana, total hog and pig inventory was estimated at 4.35 million head, down 100,000 head from a year ago, according to Nathanial Warenski, state statistician. Breeding hog inventory, at 260,000 head, was up 4 percent from last December.
Indiana’s market hog inventory, at 4.09 million head, was down 3 percent from last year.
In Michigan, total hog and pig inventory was estimated at 1.16 million head, down 150,000 head from a year ago, according to Marlo D. Johnson, director of the USDA Great Lakes Regional Field Office in East Lansing. Breeding hog inventory, at 110,000 head, was down 10,000 from last December.
Michigan’s market hog inventory, at 1.05 million head, was down 12 percent from last year.
In Ohio, total hog and pig inventory was estimated at 2.75 million head, up 50,000 head from a year ago, according to Cheryl Turner, state statistician. Breeding hog inventory, at 200,000 head, was down 5 percent from last December.
Ohio’s market hog inventory, at 2.55 million head, was up 2 percent from last year.
Using the Carcass Price National Weighted Average, Miller quoted: First quarter of 2022 at $83-86; second quarter of 2022 at $88-92; third quarter of 2022 at $88-92; and fourth quarter of 2022 at $78-84.
Plain said he used the Iowa-Minnesota Based Carcass Price Negotiated Sales to forecast his quotes: First quarter of 2022 at $69; second quarter of 2022 at $82; third quarter of 2022 at $83; and fourth quarter of 2022 at $68.
Brown said he used the Chicago Mercantile Exchange equivalent carcass basis, forecasting: First quarter of 2022 at $82.50; second quarter of 2022 at $91; third quarter of 2022 at $87.50; and fourth quarter of 2022 at $73.