On June 27 USDA will release the results of their latest survey of the U.S. swine inventory. Ron Plain, University of Missouri calculates the breeding herd is 2.0% smaller than a year ago. But he pegs the market hog inventory up 6.2%. That puts the total herd about 5.4% bigger than on June 1, 2007.
Plain's estimates of hogs in the 60 to 179 pound weight groups implies that third quarter hog slaughter will be 7% or so above year-ago levels, if the inflow of slaughter hogs from Canada continues to be below year-ago levels. He expects third quarter live hog prices to average close to $52 per cwt.
He projects fourth quarter 2008 hog slaughter to be nearly 3% larger than the number slaughtered in October-December 2007. If so, look for fourth quarter 2008 hog prices to average close to $46/cwt on a live basis.
USDA will make upward revisions in their previous inventory estimates. Hog slaughter during March-May was 2% higher than expected based on the March inventory report. A 15% decrease in slaughter hog imports from Canada exacerbated the difference. Spring slaughter of U.S. raised hogs was 2.6% higher than the March report implied. The new circovirus vaccine is reducing death loss which may explain most of the increased slaughter.
In their last inventory report, USDA predicted March-May farrowings would be 0.5% larger than a year earlier and June–August farrowings would be down 2.5%.
"I think spring farrowings were actually up 2.5% and I believe summer farrowings will be only 1.0% smaller than last year," says Plain "I'm forecasting fall farrowings to be down 3.0% compared to September-November 2007. Astronomical corn prices are causing hog producers to lose lots of money. Spring sow slaughter was 10% higher than a year ago."
"I'm estimating pigs per litter were up 1.1% this spring, making the March-May pig crop 103.6% of a year ago," says Plain. "Feeder pig imports from Canada were up 14.7% this spring, so the light weight market hog inventory should be up a bit more than the pig crop implies.
Plain estimates of the June 1 market hog inventory by weight groups are: 180 pounds and heavier 108.5%, 120-179 pounds 108.0%, 60-119 pounds 107.0%, and under 60 pounds 103.7% of a year earlier.
USDA's best guess pegs 2008 crop corn use for feed at 5.15 billion bushels. That's down 16% from the 6.15 billion projected for the current crop year which ends Aug. 31.
Larger market hog inventories point to higher feed use. A 1% cut in expected farrowings comes no where near matching a 16% cut in feed use. No other livestock species is anywhere near cutting production 16%.
Higher corn prices may be merely part of the livestock woe if supplies really get tight. When corn availability becomes an issue, nothing will be cash corn inventory socked away in storage.