USDA’s June Hogs and Pigs Report showed the breeding herd to be down 1 percent from last year. This came as a surprise to many industry experts who had projected the breeding herd to grow 1 percent from 2000 levels.
“The breeding herd numbers were really surprising,” says Ron Plain, University of Missouri agricultural economist. “Producers have made a profit 15 of the last 17 months, and corn is well under $2 per bushel. Historically, the industry has never gone this long being profitable without increasing the size of the breeding herd. This was a pleasant surprise.”
The futures market has taken a particularly positive view of the breeding herd number, with the October 2001, December 2001 and April 2002 contracts moving limit up, and the February 2002 contract within 3 cents of a limit move.
The breeding herd number does raise some questions about the USDA reports. But, Plain says the quarterly reports have been very accurate and reliable over the last couple of years. The monthly reports are another story. They are still working the bugs out.
One thing that’s concerning are the 2001 farrowing intentions – they don’t seem to agree with the breeding herd numbers. Intentions for the June/August period were up 1 percent and the September/November intentions were up 2 percent from a year ago. About 1 percent of that increase could be explained away by productivity increases, but the additional 1 percent indicates some of the numbers in this report may not actually add up.
Still, the June report showed good news and that should keep pork production profitable for a while longer, says Plain. Here are his slaughter and price projections into next year:
|2001||(million hd.)||($ per hundredweight)|
Ron Plain University of Missouri agricultural economist