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June Hogs and Pigs Report meets market expectations

National Pork Board Sows in a farrowing house
Breeding inventory, at 6.17 million head, was down 0.8% from last year, but up 1%, or around 70,000 head, from previous quarter.

The United States inventory of all hogs and pigs on June 1 was 72.5 million head, a 0.9% decrease from the year prior and a slight reduction from the March report.

Breeding inventory, at 6.17 million head, was down 0.8% from last year, but up 1%, or around 70,000 head, from the previous quarter. Market hog inventory, at 66.4 million head, was down 0.9% from last year, also down slightly from last quarter.

During the National Pork Board webinar Wednesday, Altin Kalo, chief economist with Steiner Consulting Group, said most of the numbers came very close to what the analysts were expecting coming into the report.

"We always kind of look at what the analysts' expectations are as a proxy for what sort of is built into the market," Kalo said. "The thinking is that the futures are certainly pricing some of these expectations and if the number comes too far out of the range, then maybe we expect some sort of an adjustment when the markets open up tomorrow. Based on this, I would say that this is a neutral report for the market."

One number that was slightly different from what the analysts were expecting was the supply of hogs coming to market during mid-October to late November. Kalo said these would be hogs that are under 50 pounds at this point in time.

"The USDA survey says that the supply of hogs is about 1.3% forward than it was last year. Last year we saw weekly slaughter during that time period hit about 2.6 million head per week. According to this, we're probably going to be about 35,000 head below that on a weekly basis," Kalo said. "But again, those are rough numbers. In any given weeks, there are other factors at play. You can have plants that may be down, they're running maintenance, other kinds of disruptions, but at least this sort of sets a baseline as to what the supply estimates are for the rest of the summer, and then going into the fall."

As for the increase in the breeding inventory from last quarter, Kalo said there are a few inputs that go into that.

"One is how many of the sows that you already had were culled during that quarter," Kalo said. "Did we see an increase or decrease in imports and what the gilt retention was during the quarter."

The March-May 2022 pig crop, at 32.9 million head, was down 1% from 2021. Sows farrowing during this period totaled 2.99 million head, down 1% from 2021. The sows farrowed during this quarter represented 49% of the breeding herd. The average pigs saved per litter was 11 for the March-May period, compared to 10.95 last year.

United States hog producers intend to have 3.02 million sows farrow during the June-August 2022 quarter, down 1% from the actual farrowings during the same period one year earlier, and down 7% from the same period two years earlier. Intended farrowings for September-November 2022, at 3.01 million sows, are down 1% from the same period one year earlier, and down 5% from the same period two years earlier.

Kalo said one thing that stood out in the farrowing intentions that was reported when compared with the breeding herd on June 1, is the ratio at 48.9.

"Last year was a little bit higher, but last year seemed to be a little bit of an aberration as well. The previous seven years, the ratio has been over 50. So, are we going to go back to the previous ratio or was last year also a function of labor challenges, Covid and disruptions that producers had to endure and maybe some of those disruptions have receded a little bit," Kalo said. "We don't know, but to me it seems that that the farrowing intention, at least from the historical perspective, is a little bit on the low side and we may actually have a few more farrowings that what the USDA survey suggested. That implies that the production numbers down the road, especially for the December- February quarter may not be down as much as what the USDA would suggest."

The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 50% of the total United States hog inventory, up 1% from the previous year.

Revisions
All inventory and pig crop estimates for June 2021 through March 2022 were reviewed using final pig crop, official slaughter, death loss and updated import and export data. The revision made to the March 2022 all hogs and pigs inventory was 0.6%. The revision made to the December 2021-February 2022 pig crop was 0.4%. The net revision made to the December 2021 all hogs and pigs inventory was 0.3%. A net revision of 1.2% was made to the September-November 2021 pig crop.

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