The rate of contraction in the U.S. swine herd inventory has picked up steam. The March, 2010 Hogs and Pigs report, released today by USDA, shows a total inventory of 64.0 million head, down 3 percent from last year. Breeding inventory was pegged at 5.76 million head, down 4 percent from 2009.
The news added an optimistic outlook for the pork industry as the numbers indicate that herd reduction has occurred at a livelier pace than had been indicated in pre-report estimates. In a briefing sponsored by the National Pork Checkoff after the report was released, four industry analysts gave their reactions to today’s report.
“It appears that a long string of boring Hogs and Pigs reports has come to a screeching halt with today’s report,” says Steve Meyer, president, Paragon Economics, Des Moines, Iowa.
“Some of the fireworks we saw in the cash market in January and February look like they will continue into the summer as supplies become tighter," says Len Steiner, president, Steiner Consulting Group, Manchester, N.H. “This is not a boring report.”
“The report will likely be viewed as very bullish by traders in the industry,” says Erica Rosa, agricultural economist, Livestock Marketing Information Center, Lakewood, Colo. “Overall, we’re looking at tighter supplies. The industry stands to regain some of its capital and equity as we move ahead.”
While the breeding herd inventory in today’s report is one of the smallest on record, consultants added a touch of balance to their comments. “Tighter supplies ahead may be balanced by the record number of pigs saved per litter,” says Rosa. “We’re still seeing pigs per litter up, which will counterbalance the tighter supplies that lie ahead.”
In addition, hog slaughter weights have been increasing and productivity remains very high. “We continue to produce more pork per breeding animal,” adds Darrell Mark, Extension livestock marketing specialist, University of Nebraska.
Pork exports for 2010 remain a question and, in light of today’s report, may add more interest to the pork industry as the year unfolds. China has re-opened its market, however time will tell how much U.S. pork is shipped to Beijing.
China is re-building their swine herd, and the increased level of production expected there “will come into play in terms of actual tonnage we ship to China,” says Rosa. “I expect pork exports will continue to improve in 2010, especially with Mexico and Japan, our two key markets.”
“If exports pick up, it will really get this market rocking and rolling this summer,” Steiner adds. “We expect export numbers to continue to grow.”
Mark added a note of caution on exports going forward. “One key factor to watch is the value of the U.S. dollar,” he notes. “We’ve seen a rally in the value of the dollar over the last few weeks. If we sustain a strong dollar, it could add pressure to exports this year.”
Today’s report, and the chances of a return to producer profitability it signals, is expected to lead to a slowdown in sow culling. “I think that sow culling is likely to come to an end,” says Steiner. “This report will give producers a reason to stick around because there is getting to be some profitability back in the industry.”