Although the March, 2011 USDA Quarterly Hogs and Pigs released Friday did not indicate that U.S. pork producers are expanding their herds, the industry is still improving on productivity.
According to the report, the U.S. pork industry recorded a record-high 9.8 pigs per litter in the Dec. 2010 through Feb. 2011 period, continuing the rising productivity trend which has been an industry hallmark for years.
“A key number in today’s report is the pigs per litter,” said Erica Rosa, agricultural economist, Livestock Marketing Information Center, Lakewood, Colo. “Overall, pigs per litter looks like it will continue to set records and continue to drive hog marketing numbers. The genetics are very impressive for this industry.”
The comments were delivered in a media conference sponsored by the National Pork Checkoff following the release of the report.
Farrowing intentions for the upcoming two quarters also was noteworthy according to one conference commentator. “I expected these numbers to be 1 to 1 1/2 percent higher than they were,” said Daniel Bluntzer, director of research, Frontier Risk Management, Corpus Christi, Texas.”I would expect these farrowing intention numbers will add support to the market.”
U.S. pork producers intend to have 2.85 million sows farrow during the March-May 2011 quarter, down 3 percent from the actual farrowings during the same period in 2010, and down 5 percent from 2009.
“If these farrowing intention numbers are proven correct, they imply a smaller pig crop than expected,” said Altin Kalo, economist, Steiner Consulting, Manchester, N.H. Kalo sees strong export demand for U.S. pork through the next two quarters. “One thing to keep in mind is that this market is not trading on supply but on demand, and in particular, export demand.”
The industry remains cautious due to market volatility seen in input prices and pork producers are largely seen to be delaying herd expansion. This delay helps explain the lower farrowing intention numbers in the report just released. However, it takes fewer sows farrowing at higher litter sizes to yield the same number of market hogs. “With the great productivity increases generated by the industry, is there a need to expand at this point in time?,” asks Rosa.
U.S. pork producers remain very concerned about the outlook for corn prices in the short term, especially going into the summer. “I don’t think they will be making any significant decisions as far as expanding production until there are signs of a significant increase in corn supply here in the United States,” says Kalo. “It will take a lot of effort to grow the corn supply especially considering the pull from the ethanol and export sectors.”
Steve Meyer, president, Paragon Economics, Des Moines, said that 2011 breakeven price for pork producers, based on the Iowa State University forecast model, stands at around $82.50 per 100 pounds carcass.