The United States inventory of all hogs and pigs on Sept. 1, was 73.8 million head, down 1% from last year, but up 2% from June, according to the Quarterly Hogs and Pigs report published Thursday by the USDA's National Agricultural Statistics Service.

Breeding inventory, at 6.15 million head, was down 1% from last year, and slightly down from the previous quarter. Market hog inventory came in at 1% reduction from last year, with 67.6 million head, but was up 2% from last quarter.

Altin Kalo, chief economist with Steiner Consulting Group, called the report bullish as most of the numbers that came out were on the lower end or outside of the range of the pre-report estimates.

"Based on this survey for September, early October slaughter should be running about 1.5% less than it was a year ago. October to early mid-November, again, it's not precise, the number should be down about 1.2% from a year ago," Kalo said. "And then December, January, February, which at least based on this survey, you'd expect the slaughter numbers to run down about 1.6% less. For the entire period, September through February, USDA is saying that we're going to have about 1 million head less than we did a year ago for marketing. The previous year, we had fewer hogs than the year before, and so we are seeing fewer hogs come to market, and it's a function of the smaller breeding herd, and it's a function of lower productivity."

During the National Pork Board webinar Thursday afternoon, Kalo noted one positive for the pork market he has noticed the last couple of months is that the ham market has been extremely firm, and it's been in part because one of the United States' largest customers, Mexico, is buying significant volumes.

Also due to the highly pathogenic avian influenza, Kalo says the domestic pork market is seeing very strong demand from retailers getting ready for the fourth quarter.

"There is going to be a significant shortfall of turkeys for that period. We lost a lot of turkeys, somewhere around 5 million ahead or so during the spring, and we've lost another million plus head in the last few weeks," Kalo says. "So the demand for hams is very strong, but I think the industry's still positioned to supply the market pretty well through the fourth quarter."

Kalo says the breeding herd was probably one of the better numbers in the report, however high feed costs and uncertainty about export demand have had an impact on producer decisions and their ability to expand. Another area that continues to be a big question mark for the industry is what's going to happen with Proposition 12 and how that's going to affect producers, based on the requirements California and Massachusetts have put in place.

"Overall, the breeding herd right now is about 38,000 head less than it was a year ago at this time," Kalo says. "That's important because it's going to affect what the farrowing numbers are for the September, November time period, but it's also going to affect what those farrowings are going to be in future quarters, because the breeding herd that we have available today also determines how many hogs we're going to have available in future periods."

The USDAS is projecting pork production to be up next year and per capita availability next year to be a little bit higher than it was this year, however Kalo says that remains to be determined.

"We export about 25% of all the pork that we produce. However, since 2000 exports have accounted for about 65% of the overall growth in pork production. If you take all the pork increase that we've had during the last two decades, 65% of that increase has gone to exports," Kalo says. "Without the export market, it's going to be very challenging to maintain prices here because the per capita consumption in the U.S. tends to be fairly stable and prices are fairly stable because of that. It's going to critical to see what happens with pork exports in the next 6, 9, 12 months, and what effect the strong dollar does have on that export demand, especially in those Asian markets."

Key findings in the report include:

To obtain an accurate measurement of the U.S. swine industry, NASS surveyed roughly 4,700 operators across the nation during the first half of September. 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 2021.

Revisions
All inventory and pig crop estimates for September 2021 through June 2022 were reviewed using final pig crop, official slaughter, death loss and updated import and export data. The revision made to the March 2022-May 2022 pig crop was 0.1%. A net revision of 0.7% was made to the March 2022 all hogs and pigs inventory. The net revision made to the December 2021-February 2022 pig crop was 0.6%.