For the last several quarters, the USDA’s Quarterly Hogs and Pigs inventory report has held few surprises and the general trend has been towards expansion. The June 27 report continued this trend, setting inventory records and showing continued growth in hog production, but this report also came with a few surprises that demonstrate the success of the U.S. pork production.
First, total inventory of hogs and pigs hit the highest number for June 1 since inventory estimates started in 1964. According to the report, the total U.S. hogs and pigs inventory is at 75.5 million head, up 4 percent from last year and up 1 percent from last quarter. The total market hog inventory also set a record at 69.1 million head.
The first real surprise in the report was the inventory of hogs in the 180 pounds and up weight category. This number is up 7.5 percent from last year at 13.059 million head.
“The 180 pounds and over, that inventory estimate was as of June 1. Realizing a lot of those hogs have been slaughtered already, yes, that number did stand out,” said Lee Schulz, associate professor of agricultural economics at Iowa State University, during the Nation Pork Checkoff’s Ag Media teleconference call.
Schulz went on to say, “For the most part, those hogs have been worked through, so I don't see a major impact. A lot of that information has already been priced into the market.”
Factoring into this large increase was a substantial increase in slaughter numbers for the month of June.
“Actual slaughters so far during June has been up 9.2 percent,” said Steve Meyer with Kerns and Associates during the call. “USDA picked up a large portion of that increase in slaughter during the month of June.”
The other market weight categories increased about 3 percent each from a year ago.
On the breeding side, total breeding inventory was at 6.41 million head, up 1 percent from a year ago and up 1 percent from last quarter. It is a slightly smaller increase than what analysts had expected ahead of the report.
Despite that increase, farrowing intentions going forward were not what analysts had expected. June-August intentions for 2019 are actually down by about 15,000 head from 2018, and September-November intentions are unchanged from a year ago.
“I think that does generally align. We have seen a softening of profitability because of prices and higher costs,” said Schulz. “When you look from early April, my calculations show that we've lost about $11 per hundred weight, and when you look across 2019 marketing periods, it is almost $25 per head.”
He goes on to say that even though farrowing intentions are lower, there is a limit to just how low those numbers can go given the size of the breeding herd.
Perhaps the most notably value from the USDA’s June report was the number of pigs per litter.
“The March through May pigs per litter coming in at 11, which is 3.5 percent higher. I think that's certainly one of the numbers that was surprising out of the report,” said Scott Brown, Extension economist with the University of Missouri. “It just reminds me how good pigs per litter have been in a number of states.”
Many individual states, Minnesota, Indiana, Kansas, Missouri, North Carolina, Pennsylvania, and Texas have all improved the number of pigs weaned per litter since last year. They have seen increases over 0.4 pigs per litter.
“It certainly suggests to me that some of the disease issues we've seen in the industry, PRRS (Porcine Reproductive and Respiratory Syndrome) being the one that sticks out, may have given us this big jump,” said Brown. “If we continue to see pigs per litter running at these kind of growth rates going forward, it spells certainly a lot more hogs as we go through time.”