Hog slaughter continues running below year-ago levels, as indicated by last week’s 1.999 million head figure. That represents a 1.9 percent annual decline. As pointed out previously, recent totals have generally agreed with supply totals implied by the March Hogs & Pigs report. One development that very likely contradicts bullish ideas about the summer hog situation has been the actual increase in pork production experienced lately. For example, last week’s preliminary USDA total, at 433.0 million pounds, topped the comparable 2013 result by 3.0 percent.
Soaring hog weights account for the relative increase in pork production. As indicated by Tyson executives this week, they’re buying huge animals in an effort to offset reduced swine availability. This phenomenon was lent credence by the latest weekly report on Iowa-Southern Minnesota marketings. Barrow and gilt weights traditionally post a first-half high in March, but didn’t reach their spring 2013 peak until late April. The average market weight posted a record high at 287.5 pounds/head during that same week last month, then seemed to head lower. However, they matched the April record last week, thereby exaggerating pork production per head. As industry execs pointed out, that doesn’t increase spare rib supplies, but trimming production has probably surged.
Major premiums in July and August futures indicate the hog/pork industry still expects major reductions in hog and pork supplies this summer. And, as pointed our previously, underlying pork demand, especially from export customers, seemingly remains quite robust. We at Doane aren’t entirely persuaded that the situation will tighten that dramatically, but we are also wary of being over-hedged in those circumstances.