The U.S. Department of Agriculture’s December “Hogs and Pigs” report had bullish market hog numbers and bearish farrowing numbers. USDA’s numbers were close to the average of trade estimates for all hogs and for market hog numbers. USDA was higher on sows farrowed and pig crop. The December 1 market hog inventory was smaller than a year ago for the first December since the PEDV struggles of 2013.
The table below shows this year’s December 1 hog inventory as a percent of a year earlier both for the average of pre-release trade forecasts and for the USDA "Hogs and Pigs" survey.
Coronavirus has disrupted much this year including the pork industry. COVID-19 in packing plant workers has restricted slaughter capacity causing hogs to back up on the farms. With a hand full of exceptions, weekly slaughter weights have been up all year long. How to estimate the number of these backed up hogs has been a challenge for NASS.
The June “Hogs and Pigs” report estimated the 180-plus-pound market hog inventory at 14.687 million head, up 12.83% year over year. The actual hog slaughter for the five weeks beginning June 1 was only up 3.66%. The September report estimated the 180-plus-pound inventory at 14.169 million head, up 9.85% from the year before. The actual hog slaughter for the five weeks beginning September 1 was down 1.15%. The December report revised down the June 180-plus-pound group from up 12.83% to up 5.99% and revised down the September 180-plus-pound group from up 9.85% to up 1.32%.
The December report included other major revisions to previous estimates. USDA lowered the December 2019 market hog inventory by 820,000 head (1.13%), lowered the March 2020 market hog inventory by 1,450,000 head (2.035%), lowered the June 2020 market hog inventory by 2,270,000 head (3.097%), and the September 2020 market hog inventory by 665,000 head (0.913).
As would be expected given these inventory changes, USDA also lowered September-November 2019 pig crop by 746,000 head (2.06%), lowered the December-February pig crop by 989,000 head (2.847%), and lowered the March-May 2020 pig crop by 289,000 head (0.827).
As would be expected given the pig crop changes, USDA also lowered the September-November 2019 sows farrowed by 68,000 litters (2.08%), lowered the December-February sows farrowed by 90,000 litters (2.85%), and lowered March-May 2020 sows farrowed by 23,000 litters (0.725%).
There were small or no changes to pigs per litter. Pigs per litter has held fairly steady at 11.1 head, more or less, for the last seven quarters.
USDA made no changes to past breeding herd estimates. One has to question the usefulness of the breeding herd inventory estimate when past sow farrowings are reduced but the past breeding herd is not reduced. USDA said the December breeding herd was down 3.0% year-over-year, but that September-November farrowings were only down 1%, and December-February farrowing intentions would be up 1.6% and March-May would be down 0.8%.
September-November farrowings was down 1% compared to the revised year-ago estimate but was down 3.1% compared to the unrevised year ago number.
Sow slaughter is consistent with the low farrowing intentions. Sow slaughter has been up every week thus far in 2020 except for four. During September-November sow slaughter was up 6%. Net of Canadian imports, slaughter of U.S. raised sows was up 7.6% or 50,000 head. Higher sow slaughter implies lower farrowings.
The market hog inventory by weight groups look encouraging. Only the 180-pound-plus group is larger than a year ago and then only by 1.2%. The under-50-pound group is down 1.4% and the September-November pig crop also was down 1.4%. These reductions imply reduced hog slaughter during March-May; but spring slaughter is unlikely to drop below the extremely low COVID-driven levels of last spring.
Hog slaughter has been far below the level indicated by the quarterly market hog inventory in the last three surveys. March-May slaughter was down 2.8868 million head; June-August was down 1.5576 million head; and Sept-Nov hog slaughter was down 2.3251 million head relative to the heavy weight inventories at the start of the quarter. Since it doesn’t appear that there is enough slaughter capacity to handle the surplus, the backlog may well last until spring.
First quarter 2020 hog slaughter was up year-over-year. Second quarter slaughter was sharply lower because of COVID slaughter capacity. Third quarter was up and fourth quarter was even.
The table below shows actual hog slaughter for 2020 and my forecast for 2021 hog slaughter. Commercial hog slaughter in 2020 should be a bit under 132 million head, up 1.5% from 2019’s record. If USDA’s numbers are correct, production trends continue, and hogs are marketed on a timely basis, then 2021 hog slaughter is likely to be slightly over 135 million hogs, up 2.6% from 2020.
Hog prices were extremely low during April-September 2020. Hopefully, prices will be much stronger this year.
Source: Ron Plain, who is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. The opinions of this writer are not necessarily those of Farm Progress/Informa.