Iowa hog inventory is second largest on record

Iowa hog inventory is second largest on record

USDA's latest survey shows Iowa with 21 million hogs on farms, up 10% from a year ago.

Editor's note: The latest USDA survey on the status of Iowa's hog industry shows the state had 21 million hogs on farms as of June 1. That's the second-highest number since records began in 1870. The highest figure was December 2014 when the state had 21.3 million hogs. USDA, which released this latest quarterly hog survey report on June 26, says the latest figure is 10% higher than the inventory a year ago.

MORE HOGS ON FARMS: The latest quarterly USDA survey, released June 26, shows Iowa had 21 million hogs on farms as of June 1.That's a 10% increase over the inventory of a year ago.

Iowa is the nation's leading pork producer by far. The figures show Minnesota is second with a little more than 8 million hogs and North Carolina is right at 8 million. Illinois has 4.6 million, Nebraska 3.2 million and Missouri 2.9 million. The national inventory is 66.9 million head. Lee Schulz, Iowa State University Extension livestock economist, provides the following analysis and outlook for hog supplies and prices.

Perspective makes a difference when you view this report
USDA'S June 26 quarterly Hogs and Pigs Report told us where the industry is and where it may be headed. While year-over-year comparisons are a popular way to evaluate changes in inventories, major changes in one period can affect the interpretation of the report. The report showed a big surge in inventories compared to the PEDV-depressed levels a year ago. But inventories aren't that far out of line with June 2013 levels prior to PEDV.

Total inventory of hogs and pigs on U.S. farms at the start of June was 66.9 million head, up 8.7% from a year earlier and up 2.6% from two years earlier. The breeding herd inventory, at 5.926 million head, was up 1.2% compared to 2014 and up 0.7% compared to 2013. The market hog inven­tory, at 60.975 million head, was up 9.4% from last year and up 2.8% from two years ago. Compared to 2013, breeding and market hog numbers for this report indicate continued modest growth in the industry.

Expect increases in market hog supply for next few months
The market weight breakdown gives a good indication on how the industry will unfold in the next several months. Market hogs over 180 pounds were up 13.4%, over 3% higher than expectations, but actually closer to slaughter numbers the industry has been seeing, than the trade guesses would indicate.

~~~PAGE_BREAK_HERE~~~

Market hogs in the 120 to 179 pound category were up 11.5%; 50 to 119 pounds, up 8.7%; and under 50 pounds, up 6.6% compared to a year ago. Market hogs at 120 to 179 pounds were 1.8% above trade expectations, while market hogs under 50 pounds were 1.4% below expectations. Year-to-year percentage increases in market hog inventories are front-loaded for the next several months.

The March-May pigs saved per litter, at 10.37 pigs, was up 6% compared to 2014. The March-May sows farrowing, at 2.850 million head, was up 1.4% compared to a year earlier. Thus, it netted a 7.5% increase in the March-May pig crop, but it was only 2.2% above 2013 levels.

PEDV outbreak caused changes in breeding decisions in 2014
June-August 2015 sows farrowing, at 2.915 million head, would be down 2.5% compared to a year ago, and September-November 2015 sows, farrowing, at 2.865 million head, would be down 4.3%. Comparison to 2014 levels alone has an impact on interpretation of these far­rowing intention estimates.

The market shock induced by PEDV caused changes in breeding decisions in 2014. Potential for large profits and the opportunity to offset losses from PEDV encouraged producers to maximize sow farrowings. In fact, June-August 2014 and September-November 2014 sows farrowing were the largest number since the June-August 2009 period. Farrowing intentions for June-August and September-November are 0.9% and 3.1%, respectively, above 2013 "sows farrowed" levels.

Why are hog prices lower? Heavier weights of market hogs
If inventories are not that far out of line with June 2013 levels, why are hog prices lower than in 2013 and much lower than last year? Current inventories would translate to higher prices if everything else remained unchanged. However, pork production in 2015 is forecast to be 6% to 8% above 2014, and 4% to 6% above 2013. Heavier carcass weights have contributed to larger pork production. Average carcass weight in 2015 is forecast to be 213.1 pounds vs. 213.9 pounds in 2014 and 207.2 pounds in 2013.

With the increased production, pork prices have moderated for consumers. Retail composite pork prices as mea­sured by USDA peaked in 2014 at $4.02 per pound, a 10% increase for the year. Highest monthly prices were reached in September 2014 at $4.22 per pound. Since then, they've fallen each month to $3.70 per pound in April 2015, a 14% drop from the peak. However, retail pork demand remains strong. The per capita consump­tion increase has been enough to offset the price decrease and allow overall pork inflation-adjusted values to climb.

Pork has opportunity to gain larger share of total meat consumption
Tight supplies of two major competitor products (beef and poultry) were supportive to pork demand in 2014. Competitive meats will likely continue to have a differential impact in 2015. Expected expansion of 4% to 5% in poultry production will increase competition for pork. However, beef production is expected to be down 1% to 2% and that gives pork the opportunity to gain a larger share of total red meat and poultry consumption that beef could be losing in 2015.

If there is a bearish tone to pork demand it's in the export market. Through April 2015 pork exports are down 7.4% compared to year ago levels. While ship­ments of U.S. pork were initially con­strained by problems at U.S. West Coast port facilities, a longer term factor likely to slow exports is the high value exchange rate of the U.S. dollar. An appreciated value of the U.S. dollar can make U.S. pork products less competitive (i.e. more expensive) in foreign markets versus competing pork exported from countries such as Canada, Europe and Brazil.

Schulz is the Iowa State University Extension livestock economist. Contact him at [email protected].

TAGS: USDA
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish