USDA’s September’s Hogs and Pigs Report showed the U.S. inventory of all hogs and pigs– at 58.6 million head – was down 1 percent from a year ago.
The quarterly report showed the Sept. 1, U.S. breeding herd was down 1 percent from the same period in 2000, and down slightly from USDA’s June report. The June/August pig crop was down 2 percent from that same time in 2000, and down 3 percent from 1999. Sows farrowing during the June/August period totaled 2.84 million head, 2 percent below last year.
Most expectations were for the inventories to be unchanged to up slightly from year-ago levels. The report was very producer-friendly, which means hog prices should hold strong, according to Ron Plain, University of Missouri agricultural economist.
“The report seems to indicate that slaughter will probably fall below last year’s levels and remain there for the rest of the year,” says Steve Meyer, livestock economist for the Livestock Marketing Information Center.
The news may not be all rosy for pork producers, however. Farrowing intentions for the December/February period are 3 percent higher than actual farrowings for the same period a year ago.
Steve Nicholson, Doane Agricultural Services agricultural economist says the farrowing intentions are bearish, but he believes the numbers might get revised lower in future reports.
If the December/February farrowing intentions remain unchanged, it could mean that slaughter in fourth quarter 2002 could exceed this year’s levels by 3 percent to 4 percent. At that level, slaughter could pressure capacity limits. However, the litter productivity gains appear to be leveling off, with the June/August pigs per litter coming in down slightly from a year ago at 8.82 pigs.
Ron Plain, University of Missouri agricultural economist, says there’s not much construction of new facilities going on, so he is skeptical as to whether much expansion is actually occurring. Plain also points out that hog slaughter will run close enough to capacity that an untimely closing of a major packing plant would leave the United States with more hogs than could be slaughtered.
Factors outside of the pork industry may hurt pork demand, but Nicholson thinks the effects will be minor.
“An economic slowdown could hurt meat consumption, but beef and chicken may bear the brunt of that,” says Nicholson. “With the current economic environment, restaurant trade has dropped off considerably, which hurts beef and chicken more than pork. I also think consumers will look at prices and see what is a good value. That way pork may not see a huge demand downside.”
Following the Hogs and Pigs Report, three agricultural economists shared their views on what lies ahead. Here are the price projections from Ron Plain, University of Missouri agricultural economist, Steve Meyer, Livestock Markeing Information Center livestock economist and Stephen Nicholson, Doane Agricultural Services livestock economist.