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Hog report suggests tighter supplies ahead

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Producers may be taking more of a measured approach going forward.

The U.S. Department of Agriculture released the much-anticipated “Quarterly Hogs and Pigs” today, revealing tighter supplies are ahead. The U.S. inventory of all hogs and pigs on June 1, 2021 was 75.7 million head, down 2% from June 1, 2020 but up 1% from March 1, 2021. The average pre-report estimate was for a 2.5% decline.

Breeding inventory, at 6.23 million head, was down 2% from last year but up slightly from the previous quarter. Analysts had expected a 1.5% decline.

Market hog inventory, at 69.4 million head, was down 2% from last year but up 1% from last quarter. The average pre-report estimate was for a 2.5% decline.

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The March-May 2021 pig crop, at 33.6 million head, was down 3% from 2020. Sows farrowing during this period totaled 3.07 million head, down 3% from 2020. The sows farrowed during this quarter represented 49% of the breeding herd. The average pigs saved per litter was 10.95 for the March-May period, compared to 11.00 last year. Analysts had expected the number to be higher.

United States hog producers intend to have 3.11 million sows farrow during the June-August 2021 quarter, down 4% from the actual farrowings during the same period one year earlier and down 5% from the same period two years earlier. Analysts had only expected this number to be down 3%. Intended farrowings for September-November 2021, at 3.08 million sows, are down 2% from the same period one year earlier and down 4% from the same period two years earlier.

All inventory and pig crop estimates for June 2020 through March 2021 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data. The revision made to the March 2021 all hogs and pigs inventory was 0.2%. The net revision made to the December 2020 all hogs and pigs inventory was 0.6%. A net revision of 0.7% was made to the September-November 2020 pig crop.

Analysts on National Pork Board post-report call all mentioned the lower pigs saved per litter number. In fact, market analyst Kevin Grier said the number caused him to revise his second-half slaughter forecast lower.

Lee Schulz noted how some states showed about a 15% year-over-year decline in pigs saved per little while other states came in higher. This, he said, means a possibility for changes in the industry. However, he said it all comes down to the biologics of the industry, especially given the economic incentives right now.

For Schulz, the surprise of the report was the two heaviest market categories were higher. Although they are still below year-ago levels, the two categories, 120-179 lbs. and 180lbs and over, were 3% and 4% higher, respectively, than pre-report estimates.

Schulz said those numbers are short-term bearish for the market “if we believe those numbers to be true.”

Dr. Tyler Cozzens with the Livestock Marketing Information Center said the report suggests producers may be taking more of a measured approach going forward given the higher input costs.

Schulz said Iowa State estimates a 26% increase in costs for 2021, which translates to $34-35 more per head from 2020. This is tempering the profitability, even as profitability is good, he added.

 

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