USDA's quarterly December Hogs and Pigs Report showed that producers continue to show discipline in expanding the herd size. If this report is correct it will be positive news for pork producers, but there has been concern over the report's accuracy.
Slaughter during December was more than 4 percent higher than expectations based on preliminary data. However, in USDA's December report, inventories of market hogs weighing 180 pounds and more were only 0.5 percent higher than a year ago. So producers either pulled marketings of nearly 300,000 head forward during December or the market-hog inventories were underestimated, say Glenn Grimes and Ron Plain, University of Missouri agricultural economists.
In addition, market weights in Iowa and Minnesota for December averaged about 2.35 pounds heavier than a year earlier, say Grimes and Plain. Translate those average weights to slaughter days and there's another 1.3 days of slaughter, which would be more than 400,000 head, say the Missouri economists.
Grimes and Plain contend the weights and marketing numbers suggest that
it's likely market-hog inventories were underestimated.
Market inventories and farrowing intentions in the December report indicate that total marketing in 2002 will be up– but only about 0.6 percent from 2001. With stable pork demand, Grimes and Plain expect profitability for at least the first three quarters of 2002, estimating a $41- to $43 per hundredweight average price for barrows and gilts at terminal markets.