Despite this being one of the most profitable periods ever in the U.S. pork industry, the recent USDA Hogs & Pigs Report did not indicate that expansion was taking place.
Kevin Bost, president of Procurement Strategies, in Des Plaines, Ill.; Dr. Chris Hurt, professor in the Department of Agriculture Economics at Purdue University, Lafayette, Ind.; and Victor Aideyan, senior analyst with Hisgraiincommodities.com, in London, Ontario provided insights in a teleconference hosted by the National Pork Board on June 27.
Steve Meyer, president of Paragon Economics, reviewed the numbers provided in the report. He said that the breeding herd is relatively stable, and the March-May pig crop is being “watched closely” at 26.371 million. In addition March-May litters were down sharply at 2.979 million litters and in what is not too surprising, the number of March-May pigs saved per litter was 9.78, down 5 percent from the last report.
“We really saw profitability begin to pick up in Sept. 2013,” says Hurt. “We thought we’d see some expansion showing up, but this report says, no, that is not the case. The other surprise is Mar-May farrowings. We expected intentions to be up a couple percent, but instead it is down fractionally, so it is indicated no expansion.”
Porcine Epidemic Diarrhea virus (PEDv) is likely the culprit in some of the numbers. PEDv is not under control yet and death loss is continuing,” adds Hurt. “Warm months have reduced it but we aren’t under control yet.”
“Profitability has been quite good for almost a year now,” says Bost. “I have the utmost respect for USDA’s numbers and their comprehensive analysis, but for the first time in my career, I can say there’s something here that doesn’t really make sense: I can only find one other year in which the December-February farrowings declined at all, and I’m not believing that the Mar-May farrowings were actually down 5 percent.”
One factor that may impact the numbers is the transition from traditional gestation stalls to pens. Several large integrators have made the commitment to switch to modified housing options and as a result, their gestation barns hold fewer breeding animals. Furthermore, the moratorium on new swine facilities is still in place in North Carolina.
While fewer pigs are going to market, they’re heavier than last year by about 10 pounds/pig. That means the impact to retailers is less than it could have been, so prices are still competitive compared to beef and chicken.