Hog producers enjoyed record hog prices this summer which I believe has caused some modest herd expansion, according to Ron Plain, University of Missouri Agricultural economist. Plain discusses his expectations for the USDA December Hogs and Pigs Report due out this Friday, Dec. 23, as well as 2012 hog prices.
I expect live hog prices to average close to $64 per hundredweight ($85 per hundredweight carcass) in the first quarter of 2012; $69 per hundredweight ($91 per hundredweight carcass) in the second and third quarters of 2012; and $58 per hundredweight ($77 per hundredweight carcass) in the fourth quarter of 2012.
My estimates are that the breeding herd is 0.8 percent larger than a year ago; the market hog inventory is 1.4 percent larger; and the total herd is 1.4 percent larger than in December 2010. My estimates of the December 1 market hog inventory by weight groups are: 180 pounds and heavier 102 percent, 120-179 pounds 101.3 percent, 50-119 pounds 101 percent, and under 50 pounds 101.6 percent of a year earlier.
September-November sow slaughter was up 4.2 percent. Imports of Canadian sows for slaughter during this period were up 8.4 percent. Thus, net slaughter of US sows was up 3.5 percent out of a sow herd that was 0.6 percent larger compared to 12 months earlier.
Slaughter of barrows and gilts during September-November was up two percent compared with a year earlier. USDA's September report implied summer slaughter would be up 2.1 percent. There appears little need for USDA to make any large changes in their September market hog inventory or their estimate of sows farrowed and pig crop during March-May.
In their last inventory report, USDA predicted that September-November farrowings would be down 0.2 percent and December-February farrowings would be 0.5 percent higher than a year earlier. There is a good chance that hot weather last summer slightly reduced the size of the winter pig crop. I believe fall farrowings actually were down 0.5 percent. I'm forecasting winter farrowings to be unchanged and March-May farrowings up 0.5 percent compared to last spring.
I believe pigs per litter were up two percent this fall. My estimate is the September-November pig crop was 101.6 percent over a year earlier.
My estimate of hogs in the 50-179 weight groups implies that daily hog slaughter during the first quarter will be one percent to 1.5 percent above year-ago levels, if the inflow of slaughter hogs from Canada is close to year-earlier levels. I expect hog slaughter during the second quarter of 2012 to be 1.5 percent higher than the number slaughtered in April-June 2011. Look for third quarter slaughter to be up 1.7 percent and fourth quarter slaughter up two percent on a daily basis.