The USDA's quarterly USDA Hogs & Pigs report on Sept. 26 implied a surprisingly quick swine industry recovery from the Porcine Epidemic Diarrhea virus (PEDv) outbreak. That was most evident from the number of pigs saved per litter and the summer pig crop. The USDA indicated that U.S. litter sizes averaged 10.16 pigs/litter, which marked an annual reduction of just 2%. That contrasts rather sharply to the 5% PEDV-driven declines suffered last winter and spring. Moreover, summer farrowings reportedly posted a 1% annual increase. The product of those two results points to a summer pig crop at 29.539 million head, which fell just 1% under the mid-2013 total (which was largely unaffected by PEDV).
The resurgent pig crop supplemented those already on the ground to boost the September 1 market hog total to 97% of last year. Moreover, an indicated 2% year-to-year jump in the breeding herd boosted the total swine population to 65.361 million head, or 98% of the year-ago result. Farrowing intentions for fall and winter were stated 4% over the year-prior counterparts, but we would remind readers that these projections are being compared to numbers that were revised drastically lower on the June and September reports.
The report implied autumn hog supplies will increase seasonally and cyclically. That is, it suggested early-October slaughter would run about 6% under year-ago, then rise gradually to just 2% under year-ago rates during the holiday season and through winter. Futures plunged upon Monday’s but the tightness of the current situation greatly mitigated the reaction soon thereafter. Still, if late-2014 hog supplies fall just 2% under those from last year, December futures around 95 cents/pound look quite elevated, since the CME index averaged 80.82 cents/pound in December 2013. Ultimately, vigorous hog and pork demand seems likely to support the market well above that level during the coming months, but it should remind producers of the potential downside of increasing supplies during the fourth-quarter.
Editor’s Note: Dan Vaught is a livestock economist for Doane Advisory Services, St. Louis, Mo. Doane distributes a number of timely, relevant newsletters to farmers that contain expert commentaries and market advice. For more information, call 314.569.2700 or go to: www.Doane.com.