| OU 307 | July 10, 1996 |
The mid-year U.S. hog situation is very different from this time last quarter. Pork supplies have simply not been corresponding with the recent numbers. Through June, the U.S. pork supply was running 4.4 percent below the same period for 1995. USDA adjusted earlier numbers closer to these levels; the SEP-NOV pig crop was decreased by over 1 million head, DEC-FEB pig crop was revised downward by over one-half million head, DEC 1 inventory was decreased by nearly 1 million head, and the MAR 1 inventory was adjusted downward by over 1.4 million head. This all means that U.S. producers had been responding to the economic pressures but the inventory numbers were not reflecting this.
June 1996 total inventories were down by four percent from both 1995 and 1994
levels. From table 1, it is interesting that breeding numbers are 5 percent
below last year and some 9 percent less than two years ago. It is evident that
producers have been culling breeding stock.
Table 1. USDA Hogs And Pigs Inventory; U.S.; June 1995.
'96 Pct. change from
Category 1996 1995 1994 1995 1994
*** U.S. June 1: (------ mil. head------)
All Hogs And Pigs 58.000 60.160 60.715 -4% -4%
Kept For Breeding 6.900 7.245 7.565 -5% -9%
Market 51.100 52.915 53.150 -3% -4%
Under 60 Pounds 20.375 21.400 22.145 -5% -8%
60-119 Pounds 12.750 13.195 13.145 -3% -3%
120-179 Pounds 9.920 10.005 9.825 -1% 1%
180 Pounds & + 8.055 8.315 8.055 -3% 0%
*** 17 States June 1:
All Hogs And Pigs 53.500 55.645 55.945 -4% -4%
Kept For Breeding 6.250 6.580 6.835 -5% -9%
Market 47.250 49.065 49.110 -4% -4%
Under 60 Pounds 18.755 19.730 20.417 -5% -8%
60-119 Pounds 11.710 12.145 12.068 -4% -3%
120-179 Pounds 9.230 9.325 9.109 -1% 1%
180 Pounds & + 7.555 7.865 7.516 -4% 1%
*** All Other States
All Hogs And Pigs 4.500 4.515 4.770 -0% -6%
Kept For Breeding 0.650 0.665 0.730 -2% -11%
Market 3.850 3.850 4.040 0% -5%
Intentions for June (table 2) also show that breeding numbers are coming
down and have significantly changed from the March Intentions Report (although
some/all of this may have been due to revisions.) The latest MAR-MAY sows
farrowing were expected to be 1 percent lower in March but the actual sow
numbers moved to 5 percent less than last year. The MAR-MAY pig crop was 6
percent smaller. The JUN-AUG intentions lowered from no change in the MAR
Report to 5 percent lower in June. The SEP-NOV first intentions were slightly
disappointing in that they were only one percent lower than last year.
Table 2. USDA U.S. Hogs and Pigs Report Farrowings and Intentions;
1995-96 Reports, 1996 Intentions; Pig Crop and Pigs Per Litter
Dec-Feb Quarter.
Report Month
Quarter June March December September
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DEC-FEB(1995-96) - 1 % # + 1 %** 0 %*
MAR-MAY(1996) - 8 % - 1 %** + 2 %*
JUN-AUG(1996) - 5 %** 0 %*
SEP-NOV(1996) - 1 %*
PIG CROP
MAR-MAY 25.490 - 6 %
PIGS/LITTER
MAR-MAY 8.47 + 2 %
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* First Intentions; ** Second Intentions
# Sows farrowing revised to + 3 % in the June Report.
On a state basis, the states of Oklahoma, Kansas, Missouri, and North Carolina
were the states with breeding herd increases (all large) in the June Report.
States such as Iowa, Indiana, and Illinois were down by 12-15 percent in
breeding numbers. Kentucky had a 19 percent reduced breeding herd while
Georgia was down by 12 percent in the same category. NC total inventories have
increased by about 1.3 million head during the past year while Iowa has dropped
by 1.2 million head. The industry still faces controversy within specific
states such as North Carolina and especially South Carolina.
The cost of feed has been the primary driving force in the profitablity of swine production. Producers who forward priced, purchased early and/or locally last year, or produced their own grain have had an entirely different economic situation than those buying on the cash market. Long term feed pricing decisions are tough--one consideration may be the use of options. Independent producers must get serious about networking to purchase feed.
June Report inventories were well below last year, with numbers the lowest since 1991 and the breeding herd the smallest in 6 years. Based on intentions, JUN-AUG farrowings could be somewhere around 4-5 percent below last year. We could have an even tighter supply of hogs this fall. Primarily because of the super-large units, North Carolina will have an ample supply but packers who depend on other areas of the Southeast may have to pay premiums to keep kill floors full.
The current beef and poultry markets will somewhat hinder retail pork prices although they should be stronger during the rest of this year. Given the current pork supply, it appears that cash hog prices could range near the mid $50's through the rest of 1996.
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