USDA’s December Hogs and Pigs report came in bearish, with numbers exceeding analysts’ expectations in virtually every category.
U.S. inventory of all hogs and pigs on Dec.1, 2003 was 60.0 million head, which was 1 percent above Dec. 1, 2002. Breeding inventory came in at 5.97 million head, down 1 percent from 2002, but up 1 percent from last quarter. Market hog inventory at 54.1 million head was 1 percent above last year, but slightly below last quarter.
The Sept.-Nov. 2003 U.S. pig crop at 25.3 million head was 2 percent more than 2002. U.S. hog producers intend to have 2.81 million sows farrow during the Dec. 2003-Feb. 2004 quarter, 1 percent above the actual farrowings for the same period a year ago. Intended farrowings for March-May 2004, at 2.85 million sows, are 1 percent below the same period in 2003.
“In general, there are more hogs, especially out of the fall pig crop, than were expected,” says Chris Hurt, Purdue University agricultural economist. “The bovine spongiform encephalopathy case may overwhlem some of the numbers, but producers haven’t brought down numbers to improve prices much.”
The $64,000 question will be how the BSE case plays out on the beef markets and how that affects pork, says John Nalivka, president and owner of Sterling Marketing.
There is concern that large supplies of overstocked beef may be competing with pork in U.S. supermarkets, but there is some hope that increased U.S. pork exports, to fill the void left by U.S. beef exports, may be able to compensate for many of the negative effects of BSE on U.S. pork. In addition, the correlation between beef and pork is not as great as it has been in the past. Also, U.S. beef producers may be in as good a position to hold cattle as they have been in a long time, due to current marketings, says Nalivka.
How the United States and Canada interact in the export market, following the May BSE outbreak in Canada and the December case in the United States, will have implications on both the U.S. beef and pork markets.
Hogs imported to the United States from Canada increased dramatically in 2003, largely due to the BSE incidence in Canada. So far, the U.S. has not resumed beef imports from Canada, so that may continue to be a factor.
Hurt, Nalivka and Jim Robb, director of the Livestock Marketing Info Center, all provided their expectations for pork production and prices in 2004. The three economists projected U.S. pork production from between 19.7 billion pounds to 20.0 billion pounds, which is up from 2003. Price projections were in the low $40-per-hundredweight range for the year.
Source: National Pork Board