Economists: H&P Report Doesn't Fully Reflect PEDV Impacts

March 31, 2014 09:20 AM



University of Missouri ag economist Ron Plain says after digesting USDA's Quarterly Hogs & Pigs Report, he doesn't believe the report fully reflects the impacts of Porcine Epidemic Diarrhea virus (PEDV).

Plain notes USDA's estimate of Dec.-Feb. pigs per litter of 9.53 was down 5.5% from a year-ago and doesn't appear to be a big enough drop to justify record prices. But Plain says the biggest surprise was in the number of litters farrowed this winter. In December, USDA predicted December-February 2014 farrowings would be up 1.3% from year-ago. Now they say winter farrowings were up 2.8%, but with 5.5% fewer pigs per litter. In December they predicted spring farrowings would be up 1.4% from year-ago and now they say farrowing intentions for spring are up 2.4% from year-ago, he says.

"Some insight into the accuracy of the 9.53 pigs per litter number may come from looking at state data. USDA reports quarterly pigs per litter for 16 individual states. The National Animal Health Laboratory Network (NAHLN) reports state data on farms with PEDV. The NAHLN data implies that there are six major hog producing states where more than 10% of the hog farms had PEDV by the end of February. Listed in order of highest to lowest PEDV rates, these states are Iowa, North Carolina, Minnesota, Kansas, Oklahoma and Illinois. The March Hogs and Pigs Report said pigs per litter during December-February were down 11.6% in North Carolina, down 10.3% in Oklahoma, and 6.6% in Kansas. But, USDA says pigs per litter were down only 4.3% in Iowa, the state with the most farms infected with PEDV; down only 0.5% in Minnesota the state with the third highest incidence of PEDV, and down 1.0% in Illinois. It is my opinion that the pigs per litter data for all major hog states will eventually look like the USDA numbers for North Carolina and Oklahoma. I expect PEDV losses to continue to expand."

Looking at the weight breakdowns of market pigs, Plain notes, "USDA's survey indicated the number of market hogs weighing 180 pounds or more on March 1 was down 4.8% compared with 12 months earlier. It looks like daily barrow and gilt slaughter in March was down 6.7% compared to a year ago. The 120-179 pound market hog inventory was down 2.9% from a year ago. The 50-119 pound inventory group was down 3.3% from a year earlier. The inventory of pigs weighing less than 50 pounds was down 4.0% compared to a year earlier. Feeder/weaner pig imports from Canada during December-February were down 12.2% and slaughter hog imports were down 13.8%. Based on the market hog inventory and the expectation of a slow decline in live hog imports, USDA's numbers imply a decrease of 3.3% in second quarter 2014 hog slaughter."

"I believe USDA has not yet captured the full impact of PEDV," says Plain. "I expect 2014 hog slaughter to come in 2% below that implied by the March survey numbers. Look for second and third quarter 51-52% lean hogs to average around $90 per cwt. live and Iowa-Minnesota negotiated sales to average close to $120 per cwt. on a carcass weight basis. For the fourth quarter, look for 51-52% lean hogs to average in the low $70s per cwt. live and Iowa hogs averaging around $92 per cwt. on a carcass basis."

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