Total Pig Inventories Exceed Expectations

11:06PM Jun 28, 2018
The biggest surprise in the June 2018 Hogs and Pigs report was producers' plan to continue expansion of the breeding herd.
( PORK )

The hog industry continues to grow, but the June 2018 Hogs and Pigs Report from USDA showed an even higher inventory than economists predicted.

The June report showed another record high report for the nation's sow and pig herd. (See coverage from the December 2017 and March 2018 reports.) Key findings of the report:

  • Of the 73.5 million hogs and pigs, 67.1 million were market hogs, while 6.32 million were kept for breeding.
  • Between March and May 2018, 33.2 million pigs were weaned on U.S. farms, up 4% from the same time period one year earlier.
  • From March through May 2018, U.S. hog and pig producers weaned an average of 10.63 pigs per litter, a record high. This is up from 10.55 pigs per litter recorded the same period last year.
  • U.S. hog producers intend to have 3.17 million sows farrow between June and August 2018, and 3.18 million sows farrow between September and November 2018.
  • Iowa hog producers accounted for the largest inventory among the states, at 22.7 million head.
  • North Carolina and Minnesota had the second and third largest inventories with 8.90 million and 8.60 million head, respectively.

Much Larger Breeding Herd
The biggest surprise was the number of pigs kept for breeding at 6.32 million head, 3.5% larger than one year ago, reported Steve Meyer of Kerns and Associates. Analysts had, on average, estimated that number to be up 1.7%, so it indicates a significant difference.

Putting the breeding herd into context, Lee Shulz, associate professor, Iowa State University, says since March 1 to June 1, U.S. producers have added 110,000 breeding herd additions. That’s the largest addition since 1997.

“When you look at the report, you can’t take those farrowing intentions at face value because of that increase in the breeding herd,” he says. “It’s all but certain we're going to see larger [numbers of] sows farrowing for June-August given the size of this breeding herd. I think it's just a debate of how much larger that's going to be.”

Prepare for Low Prices
With larger pig supplies, there might be months of red ink for producers. “We’re now looking at five consecutive years with pork production growing faster than that 1½%,” says Ron Plain, University of Missouri ag economist emeritus.

Producers were encouraged to secure feed needs while commodity prices remain moderate and find additional ways to cut production costs.

But, “this is not another replay of 1998,” Kerns adds. While the last time the industry saw an increase of more than 3% in the Hogs and Pigs report was in March 1998, there was also a shortage of shackle space capacity relative to animal numbers. That’s not the case now.

“Let's look at it this way—this is a strong signal that we need more shackle capacity. And thank goodness that we've had three new plants that are coming online,” Kerns adds. “It could have been significantly worse, if it weren't for the [processing] facilities under construction.”

The June 2018 Quarterly Hogs and Pigs report is available online at http://usda.mannlib.cornell.edu/usda/current/HogsPigs/HogsPigs-06-28-2018.pdf.