The June Hogs and Pigs Report didn’t disrupt the pork industry’s positive outlook, as hog numbers offered little surprise to market analysts.

The U.S. breeding herd continues to decline, USDA’s report indicates a 1.5 percent decline in from June 2003 levels. Since June 1998, U.S. producers have cut the breeding herd by 15 percent, notes Chris Hurt, Purdue University agricultural economist. That’s a decline of more than a million animals, putting the current inventory at 5.9 million head. “In fact, the breeding herd has been down in 19 of the past 24 quarters,” he adds.

But, the sows that do remain have been more productive, which means producers get less bang for the buck when culling sows. Despite the continuous breeding herd reductions, market hog numbers in the June report were 1 percent higher than in 2003. Glenn Grimes, University of Missouri agricultural economist, projects that the breeding herd will eventually need to drop to 5 million head.

Pigs per litter reached a record high in the first half of the year 8.9 pigs compared to 8.8 to 8.85 over the previous four years. More Canadian pigs are coming to the United States this year. About 2.5 million head entered in the first five months of 2004, up 26 percent from the same period last year. This now accounts for nearly 6 percent of the U.S. inventory .

By state, the breeding herd declines are coming from the traditional hog/corn belt: Iowa (-1 percent); Ohio (-3 percent); Michigan and Nebraska (each –5 percent); and Indiana and Missouri (each –6 percent). Producers say they will farrow 1 percent fewer sows this summer than a year ago, and will equal 2003’s fall farrowings.

Pork supplies will continue to run about 3 percent above last summer’s supply, notes Hurt. By fall supplies should moderate, and be only 1 percent larger. The winter and spring outlook suggests pork supplies will be unchanged to 1 percent higher.

“We can throw out the supply numbers anyway because it is all about pork demand right now,” says Hurt. Pork demand will likely continue to benefit from bovine spongiform encephalopathy concerns. Demand for U.S. pork has been brisk both domestically and internationally. The high-protein diet trends have certainly helped, and they don’t appear to be waning.

Live-hog prices are expected to average in the low-$50 this summer, mid-$40s in the fall, and mid-to-high $40s in the first half of 2005. For 2004, live-hog prices may average about $48, the highest prices since $51.30 in 1997, notes Hurt. 

Unexpected declines in feed costs also are helping. Hurt says estimated pork production costs are in the mid-$40s, and are expected to drop into the low-$40s this fall. “This means that the next year provides prospects of profits averaging $3 to $4 per hundredweight,” says Hurt.