Canadian Cutbacks Slow

Canada’s hog herd continues to shrink, but at a slower and slower rate, according the the quarterly Hog Statistics report released last week by Statistics Canada.

Canada’s hog herd continues to shrink, but at a slower and slower rate, according the the quarterly Hog Statistics report released last week by Statistics Canada.

Canada’s breeding herd numbered 1.298 million head on Oct.1. That is 3.8% lower than one year ago and the first time since April 1,1998, that Canada had less than 1.3 million head of breeding swine on farms. The October inventory is also 6,500 head lower than the inventory on July 1, which was slightly larger than the March breeding herd.

The decline brings the combined Canada-U.S. breeding herd on Oct. 1 and Sept.1, respectively, to 7.068 million head, down 2.2% from last year. That herd is the smallest on record and is very likely the smallest since sometime before the U.S. Civil War (1861-1865).

But Canada’s “all others” inventories (e.g., market hogs) continue to get closer and closer to year-ago levels (Figure 1). There were 10.556 million head of market pigs on Canadian farms on Oct.1, only 0.5% lower than last year. The number of pigs weighing over 132 lb. (60 kg) was 2.5% larger than last year. That marks the third straight quarter in which finishing hog inventories have been larger than a year earlier – and that is in spite of lighter weight inventories that continue to run 2-3% lower than year-ago levels.

The reason for that discrepancy, of course, is that Canada is shipping fewer weaner and feeder pigs to the United States than they did last year. As Figure 2 shows, U.S. imports of weaner/feeder pigs (technically, pigs weighing less than 110 lb. or 50 kg) have numbered between 80,000 and 100,000/week for most of 2010, with an average just over 86,000/week since March 1. Further, imports since mid-July have been almost identical with year-ago levels, suggesting that these shipments may be finding a plateau – especially if the Canadian breeding herd stops declining over the next six to 12 months.

As readers know, these weekly import data have been largely unavailable since July. USDA published data through late August back in September and published data for September through Oct. 2 last week. The problem lies with a computer database change by Animal and Plant Health Inspection Service (APHIS) border offices and some questions at the Agricultural Marketing Service (AMS, the agency that published the import numbers based on APHIS raw data) about the internal consistency of the numbers being received from various border crossing stations. AMS hopes to have the data caught up and released on a weekly schedule soon, but I’m afraid we are going to get delays and blasts for a bit longer. If recent data are available, you will see them in the Weekly Production and Price Summary tables in upcoming editions of Weekly Preview.

More and Heavier Slaughter Hogs
U.S. cutout values and hog prices remained under pressure last week as slaughter once again exceeded 2.3 million head. The weekly total of 2.311 million head was 1.5% lower than the previous week, but 0.7% higher than last year – just the ninth week this year in which that has been the case. And, it should be noted, that three of the other eight were due to different weeks or days for Memorial Day and Independence Day this year.

Average carcass weights for all hogs rose again – to 205 lb. – one pound heavier than last week and last year. The combination of higher slaughter numbers and higher weights pushed estimated pork production to 473 million pounds, 1% lower than last week, but 1.4% higher than last year.

Perhaps more noteworthy is that the average weight of barrows and gilts that are reported under the mandatory price reporting (MPR) system set a record for the second week in a row (Figure 3). The MPR system covers packers that kill about 95% of all barrows and gilts, and is the best gauge of the weight of “top” hogs, thus providing the best gauge we have regarding performance and currentness of marketings. The excluded barrows and gilts are primarily “off” hogs, many of which are slaughtered by smaller plants.

Last week’s average weight of 207.0 lb. is 2.4% higher than last year’s 202-lb. average, but is up only 0.3 lb. from last week. Note the slowing rate of increase, which raises my confidence (or hope) that we may be near a peak. The factor that may make that view more hopeful than confident is that the normal seasonal peak does not usualy occur until late November or early December, after which we have not only seen excellent growth rates, but one day of slaughter delayed due to Thanksgiving. That calendar issue would cause me to still bet on a peak the first week of December but, given the slower rate of increase, maybe it won’t be too much higher. There’s some “hope” in that statement as well.

Tough to Pull Back Slaughter Weights
We’ve always seen the impact of new corn on feed consumption and, thus, hog growth rates, but this year’s effect is truly remarkable. When you compare good corn and good weather to really lousy corn and pretty lousy weather (during July and August), the results are pretty shocking.

And, while I would urge producers to do everything they can to get weights under control, we all need to realize that the task is virtually impossible as an industry. Our plants are running close to capacity and to make slaughter weights fall by 1.5 to 2 lb., we in effect must skip the pigs to be slaughtered tomorrow and start on those that would normally come the next day. Making one day’s worth of pigs disappear is tough to do and it gets even harder when everyone really wants the “other guy’s” pigs to to be the ones that disappear.

A final footnote – I apologize for the lack of Canada sow slaughter data in the tables. Ag and Food Canada’s Hog Statistics report has not been updated on the Web since Oct. 2.

Click to view graphs.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.

TAGS: Marketing