March 1996 total U.S. hogs and pigs inventories were close to the same as one year before and two percent above 1994 levels. These data were generally good news as there are indications that the industry is responding to the current economic situation. Since the release of this report, the futures market has trended upward. However, hog prices have not moved near the magnitude as our corn prices. During the past week or so, corn prices have increased by over $.40 per bushel and over $1.00 during the past seven months. We are currently facing good product prices but terrible profits.

The March data for market numbers (see table 1) were even with the same quarter last year and three percent over two years ago. Breeding numbers were lower with the herd being down by one and four percent respectively below last year and the past two years. However, efficiency as measured by pigs per litter, keeps improving. The latest DEC-FEB pigs per litter (second part of table 3) were two percent more than the same quarter one year ago (8.42 vs. 8.27). This resulted in a pig crop of over 24 mil. head, or 2 percent more for this quarter. This increase in efficiency keeps having a major impact on production. If we had the same quarterly average of pigs per litter as five years ago, there would have been nearly 1.6 million less pigs in inventory.

Table 1. USDA Hogs And Pigs Inventory; U.S.: March 1996

				1996 percent change from
Category	1996	1995	1994	1995	1994
	(-----mil. head----)
*** U.S. March 1:
All Hogs and Pigs	58.560	58.465	57.350	0%	+2%
Kept For Breeding	6.950	6.998	7.210	-1%	-4%
Market	51.610	51.467	50.140	0%	+3%
Under 60 Pounds	19.400	19.251	18.780	+1%	+3%
60-119 Pounds	12.470	12.468	12.190	0%	+2%
120-179 Pounds	10.705	10.594	10.430	+1%	+3%
180 Pounds & +	9.035	9.124	8.740	-1%	+3%
*** 17 States March 1:
All Hogs And Pigs	54.010	54.070	52.890	-0%	+2%
Kept For Breeding	6.360	6.360	6.575	0%	-3%
Market	47.610	47.710	46.315	0%	+3%
Under 60 Pounds	17.900	17.750	17.318	+1%	+3%
60-119 Pounds	11.470	11.580	11.196	-1%	+2%
120-179 Pounds	9.905	9.900	9.732	0%	+2%
180 Pounds & +	8.335	8.480	8.069	-2%	+3%
*** All Other States
All Hogs And Pigs	4.550	4.395	4.460	+4%	+2%
Kept For Breeding	0.590	0.638	0.635	-8%	-7%
Market	4.000	3.757	3.825	+6%	+5%

It is interesting to examine pigs per litter by size of operation. Based on table 2, the larger operations are the driving force in this area. Not only are they are significantly better than the smaller sized units but this gap continues to widen.

March intentions (table 3) generally show a pattern of a reduction in numbers. The latest DEC-FEB sows farrowing were expected to be 1 percent higher in March but the actual sow numbers moved to 1 percent less. As discussed earlier, the DEC-FEB pig crop was still 1 percent larger. The decrease in MAR-MAY intentions changed from 2 percent larger in DEC to 1 percent lower in the MAR Report. The JUN-AUG first intentions did not indicate a reduction as they were the same as last year.

Overall, there are initial signs of reduction but there continues to be a mixed bag with corporate and super-large production units and contracting. The current trend is for a continuation of large supplies through the rest of this year. Hog farmers now face a very uncertain future; this is based on the feed cost situation, competing meat prices, and the likelihood of near-term low/negative profits in swine. Most of this uncertainity is still due to the grain and protein markets. The best scenario today seems to be the expectation of market hog prices at least bouncing around in the high $40's throughout the rest of 1996.

Given the outlook, or lack of, for the near-term, producers need to take some time to critically appraise their overall efficiency and especially anything that affects feed costs. It is highly suggested that no matter the size of operation, equipment, efficiency, etc. that each producer try to get some outside, non-biased source of evaluation. Our Area Livestock Extension agents would be one excellent source. If an operation is behind in feed bills and/or finds they have inefficient feed equipment, they need to immediately start working with their lender. It is further recommended that producers put some extra time into studying and trying to better understand this volatile feed market. According to Dr. John Albrecht, surviving swine operations will be those who are most agressive in efficiency/management, nutrition, genetics, technology, environmental requirements, and marketing.