By DOUG SCHMITZ
DES MOINES, Iowa — U.S. hog numbers were slightly down from last June, but up 2 percent from this March, according to the June 1 USDA Quarterly Hogs & Pigs report, released June 28.
“I think once we get to next year, we’ll be looking at 1.5, maybe as much as 2, percent more pigs next year,” said Daniel Bluntzer, director of research at Frontier Risk Management in Corpus Christi, Texas. “We could be very overpriced in corn right now. As the summer goes on, if that comes up to the realization, production will latch on to that and continue to increase the herd.”
He was referring to the latest U.S. corn acreage report stating farmers planted 97.4 million acres of corn and 77.7 million acres of soybeans. “Average trade estimates were expecting 1.5 million to 2 million less acres than the March planting intentions,” Bluntzer said.
“We actually got 100,000 more acres, so that price response in the marketplace … If we were to have a normal, kind of average-yielding crop this year, we’re going to have plenty of corn left over. We could be very overpriced in corn right now.”
While Joe Kerns of Kerns and Associates of Ames, Iowa, agreed, he cautioned that U.S. pork producers and all livestock farmers will be dealing with some uncertainty over the next few months.
“We don’t seem to be in a tight situation now, and one of the other pieces that came out of that earlier report was just how tight the current stocks are,” he said. “You’ve got a phenomenon where old crop is moving higher, new crop is moving significantly lower and the livestock production sector is going to have to navigate through some very, very difficult waters.
“We’re approaching a total pig crop that’s near where we were when we hit some trouble spots back in 2008 and 2009.”
Bluntzer joined Kerns and Ron Plain, University of Missouri-Columbia extension agricultural economist, in analyzing the June 1 USDA hog report. “In general, I’m very optimistic for the foreseeable future for producer productivity,” Kerns said, “and based on the numbers we have out today, I don’t think there’s an ‘uh-oh’ moment that we’ve discovered in these data.”
The USDA report stated the total inventory of all hogs and pigs on June 1 was 66.6 million on U.S. hog farms, slightly down from a year ago.
“We’ve been on a streak with that number being up,” Plain said. “The USDA also gives us a monthly breakout, so if you look at the pigs per litter by month, March was up 2 percent, April up 2 percent and May, up 2.6 percent – so based on that, there’s no end in sight for continuing improvement in saving more pigs for each sow that we farrow.
“Hog producers are back in the black right now, have been the last several days and, hopefully, there will be a lot more profits ahead of us and that’s going to lead to more sows farrowing.”
As the nation’s top hog producer, Iowa had 20.4 million hogs and pigs, slightly up from March but unchanged from a year ago. Indiana had a total of 3.6 million hogs and pigs, down 5 percent from a year ago. In Illinois, the number of hogs and pigs was 4.75 million head, 1 percent more than last year and 2 percent more than March numbers.
In Michigan, the total hog and pig inventory was estimated at 1.04 million head, up 20,000 from a year ago. In addition, Missouri hogs and pigs were estimated at 2.75 million head, unchanged from March but was 50,000 below last June.
In Ohio, the total hog and pig inventory was estimated at 2.17 million head, up 10,000 from a year ago; however, Kentucky and Tennessee weren’t recorded in the USDA report for this quarter.
Analysts predicted increase
Prior to the release of the report, farm analysts were predicting a 0.6 percent increase in the total inventory, according to the CME Group’s July 2 report.
“The smaller-than-expected inventory fits well with current conditions on the ground and the strong hog prices in June,” the CME report read. “Hog supplies have not been as large as earlier expected, in part due to a larger-than-expected decline in the number of pigs farrowed during the previous quarter, but also because of a steady decline in the number of hogs coming to the U.S. from Canada.”
The USDA report said U.S. breeding inventory, at 5.88 million head, was up slightly from last year and up 1 percent from the previous quarter.
“The breeding inventory, which tends to have more of an impact on the outlook for 2014, actually was larger than previously expected,” the CME report indicated. “The USDA survey pegged the breeding stock at 5.8 million head, about 48,000 head more than the previous quarter and some 20,000 head or 0.3 percent higher than a year ago.”
Moreover, the USDA report said the U.S. market hog inventory, at 60.8 million head, was down slightly from last year but up 2 percent from last quarter. “The decline in market hogs comes even as the pig crop for March-May was actually slightly higher than the previous year,” the CME report read.
“Fewer pigs coming from Canada and possibly death losses due to the outbreak of porcine epidemic diarrhea virus (PEDV) may have reduced the number of pigs available for marketing in the short term.”
Steve Meyer of Paragon Economics in Des Moines said so far, the virus has spread to almost 200 farm sites over 13 states, with authorities still unable to identify how the virus entered the U.S. herd. “What we know about this thing, we’ve got about 200 confirmed premises as of June 10 and apparently there’s some information this week of another 40 or 50 confirmed premises,” he said.
“If you do the math on it, even if those are pretty large sow farms and pretty productive sow farms, so far the losses have not been huge.”
In addition, the USDA report stated the March-May pig crop, at 30.1 million head, was up slightly from 2012. Sows farrowed during this period totaled 2.92 million head, down 2 percent from 2012. The sows farrowed during this quarter represented 50 percent of the breeding herd.
The USDA report stated the average pigs saved per litter was a record high 10.31 for the March-May period, compared to 10.09 last year. Pigs saved per litter by size of operation ranged from 7.7 for operations with 1-99 hogs and pigs to 10.4 for operations with more than 5,000.
“We still think the rate of pigs saved per litter will slow down to 1-1.5 percent growth rate but that expectation was firmly disproved in the latest survey,” the CME report estimated. “We currently estimate the pig crop for June-August to be up 0.9 percent based on current farrowing estimates and continuing increases in pigs per litter. These are pigs that will come to market during November-January.”