The March 1 inventory of market hogs at 57.048 million head was 3.7 percent lower than a year ago, continuing a run of year-over-year lower inventories beginning in June 1 2013. This is the lowest March level since 2007.

The December-February pig crop came in at 27.316 million head, which is almost 3 percent lower than a year ago. The decline occurred despite farrowings that were 2.8 percent higher than a year ago. The smaller December-February pig crop is attributable to a significantly lower litter rate, brought about by Porcine Epidemic Diarrhea (PEDv) losses of preweaned piglets:

Lower March 1 market hog inventories are largely attributable to Porcine Epidemic Diarrhea, (PEDv), a coronavirus particularly lethal to pre‐weaned piglets. The first U.S. case was formally diagnosed in May 2013, and according to the American Association of Swine Veterinarians, positive accessions of the disease continued through the fall, and accelerated early in 2014. To date, 30 U.S. States, 4 Canadian Provinces, and several areas in Mexico have confirmed cases of the disease. Currently, there is no known cure for PED. The North American pork industry is fighting the disease through enhanced biosecurity measures, supportive care of affected piglets, and controlled exposure of not‐yet‐afflicted‐animals to the disease. Controlled exposure enables the sow to develop protective immunity, which is then passed to the baby piglet through the colostrum milk.

The litter rate for the December.-February pig crop was 9.53 pigs per litter, 5.5 percent below the December-February pig crop of 2013. Production in the second quarter is forecast at 54.0 billion pounds, about 2 percent below 2013.

The decline will reflect tighter supplies of market hogs, although carcass weights are expected to average above 2013. Higher dressed weights are being driven by higher hog prices, lower feed costs, and excess barn space created by PEDv deaths. Second-quarter prices of live 51-52 percent lean equivalent hogs are expected to average $78-$82 per cwt, about 22 percent above a year ago.

The smaller December-February pig crop will be slaughtered mostly in the third quarter of this calendar year. Lower pig crop numbers will likely pull third-quarter commercial slaughter down. Partly offsetting the decline will be continued gains in slaughter weights.

For the quarter, commercial pork production is forecast at 5.5 billion pounds, a year-over-year reduction of almost 2 percent. Third-quarter prices of live equivalent 51-52 percent lean hogs are expected to average $73-$79 per cwt, almost 8 percent above the same period last year.

Despite producer intentions to increase farrowings, PEDv will likely impact pigs per litter in the second quarter, resulting in continued declines in the March-May pig crop. As in previous quarters, higher carcass weights will partly offset lower slaughter numbers, but fourth-quarter commercial pork production, at about 6 billion pounds, is expected to be about 4 percent below a year earlier.

Prices of 51-52 percent live equivalent hogs are expected to average $67-$73, an increase of 12 percent year over year.

Domestic and foreign consumers of U.S. pork will bid against one another for reduced 2014 production. Domestic consumers will likely pay more for retail pork cuts.

The retail composite pork price are expected to average in the mid-$3.90s for the year. High U.S. pork prices will dissuade some foreign consumers from buying as much U.S. pork as they did in 2013.

Total 2014 U.S. pork exports are expected to be 4.85 billion pounds, down 2.8 percent year over year. The United States will import more pork to partially offset lower domestic production. Pork imports in 2014 are forecast at 915 million pounds, a year-over-year increase of 4.1 percent.

Source: Livestock, Dairy and Poultry