Productivity to Boost 2012 Slaughter
Sow herd productivity continues to improve as producers work toward 30 pigs per sow per year. For the first time, the nation averaged 10 pigs weaned per litter in second quarter 2011, and then repeated it the next quarter. The year-over-year increase in pigs per litter averaged 2 percent for the last 17 quarters. For the first 30 quarters of this century, the average rate was just 0.5 percent annually.
After being below year-earlier levels for 13 consecutive quarters, the number of sows that will farrow is expected to be down only 0.2 percent this fall and up 0.5 percent this winter. If pigs per litter keeps this pace, the pig crop will exceed 2011 by 2 percent, and odds are good that hog slaughter will be higher in 2012.
No Break in Production Costs
Iowa State University ag economists maintain a long-running series on hog costs and profitability. Starting in February 2011, they calculated that the cost of raising hogs was record high for eight consecutive months. Labor and facility costs change over time, but feed costs drive most of the month-to-month change in the breakeven hog price.
Because most feed ingredient prices fluctuate with the price of corn, corn prices have a huge impact on feed cost and thus on production cost. Analysts predict an average corn price near $6.50 per bushel for 2012, which implies a production cost for barrows and gilts of $67 per live-hundredweight or $88 per carcass-hundredweight.
Lower Meat Supplies in 2012
Although pork production is expected to grow 1.6 percent next year, total U.S. meat production could be down 1.4 percent due to a huge 4.9 percent drop in beef and a rare 0.9 percent decline in broiler production. The U.S. cattle industry has been shrinking for several years, and this year’s severe drought has accelerated the cuts. Broiler producers over-expanded in 2010 and have faced record losses this year. There has been a sharp cut in egg sets and the number of chicks placed.
U.S. meat exports are predicted to increase slightly in 2012, and our population will grow about 1 percent. Thus, the U.S. per capita meat supply is expected to be down 2.6 percent from 2011. With less total meat, we may well be able to move more pork without having to take a price cut, if the economy escapes another recession.