Fourth-quarter production likely to be slightly below a year ago

According to the July issue of the USDA's Livestock, Dairy and Poultry report, the Quarterly Hogs and Pigs report indicated that higher actual farrowings in March-May accompanied the record-high spring litter rates. Nevertheless, spring farrowings were 1.8 percent below March-May of 2010, which─when combined with record-high litter rates—yielded a spring pig crop only slightly higher than a year ago (+0.42 percent year-over-year). While the spring pig crop points to slightly higher fourth-quarter slaughter, dressed weights will likely average below 2010 levels, which were achieved when a combination of corn-quality and optimal feeding weather boosted weight gains.

Fourth-quarter commercial pork production is expected to be 6.1 billion pounds, or about 1 percent below fourth-quarter 2010. Combining expected fourth-quarter pork production with third quarter’s expected 2 percent higher production of 5.5 billion pounds implies slightly higher second-half pork production—less than 1 percent above second-half 2010. Despite expectations of slightly higher second-half production, second-half exports are anticipated to come in at more than 12 percent ahead of second-half 2010, suggesting lower second-half 2011 domestic pork disappearance.

Consequently, continued year-over-year higher hog prices and unusually high retail pork prices are the most likely outcome for second-half 2011. Third-quarter prices of live equivalent 51-52 percent lean hogs are expected to be $67-69 per cwt, 13 percent above the same period last year. In the fourth quarter, hog prices are expected to be $58-$62 per cwt, about 20 percent above a year earlier. Second-half retail pork prices are expected to be in the high $3.30s to low $3.40s per pound.