USDA’s monthly Hogs and Pigs Report for July reveals a June pig crop nearly 3 percent higher than a year earlier, but the accuracy of the monthly reports still varies widely.
For example, this year’s January report had pig-crop numbers more than 3 percent above those of January 2000. However, market hog slaughter for July has been down almost 3 percent, according to Glenn Grimes and Ron Plain, University of Missouri agricultural economists.
So far this year, the monthly reports have consistently shown larger inventories than the eventual slaughter numbers have confirmed.
Grimes’ and Plain’s data suggests the U.S. breeding herd is being increased little – if at all. This suggests that producers have been disciplined by holding back expansion, despite profitability.
Still, the economists point out that the industry is 7 percent to 8 percent away from a potential price disaster due to slaughter capacity limitations. A decline of 7 percent to 8 percent in slaughter capacity, or that much increase in production, would bring about another drastically low run of prices.
Those percentages may seem like a significant drop in slaughter, but to keep it in perspective – if something like a fire at a major packing plant ended slaughter, it could equal that amount of a decline. Another, more likely scenario would be if an old plant were closed.