The latest USDA Quarterly Hogs and Pigs report released Friday revealed a slight increase in the U.S. market hog inventory with slightly smaller summer and fall farrowing intentions. The report also indicated that production efficiency is still improving with an average of 10.03 pigs per litter - a new record.
In a post-report news conference sponsored by the National Pork Board’s pork checkoff, two pork industry analysts provided comments on the report.
“The slight increase in the market hog inventory may cause some weakness in nearby hog futures perhaps through fall; but strength for winter futures through spring 2012,” said Chris Hurt, Purdue University agricultural economist.
Hurt said the number of hogs weighing 120 pounds to 179 pounds was about 2 percent higher than expected. “This may give us a little more pork coming to the marketplace over the next three to four months.”
Hurt said the report’s farrowing intentions for summer and fall were slightly lower than expected.
The most remarkable statistic revealed in the report is the average litter size during the reported quarter which increased 2 percent over year-ago levels to 10.03 pigs per litter, according to Dan Vaught, Vaught Futures Insights, Altus, Ark. “The achievement shows there has been a remarkable increase in farrowing efficiency over the past several years.”
Neither analyst expects that the profit picture will provide incentive for industry expansion. “We are currently very tight in terms of corn inventory and producers are really holding their breath until we see the size of the 2011 corn crop,” said Hurt. “There is no excitement in expansion until we see what the crop yields are this fall.”
“Feed costs over the next several months will make producers reluctant to expand herds,” added Vaught.
Hurt provided hog price projections (national lean basis per hundredweight) for the upcoming four quarters:
3rd Quarter 2011: $89 to $93;
4th Quarter 2011: $81 to $85;
1st Quarter 2012 $82 to $86;
2nd Quarter 2012 $88 to $92
Hurt sees an average lean hog selling price of $85 to $86 for 2011. The economist said the projected selling price would yield a 3rd quarter profitability of $11 to $12 per head. Hurt predicts more modest producer profits during the 4th quarter 2011 and the 1st quarter of 2012 of $2.50 per head, increasing to $12 per head during the 2nd quarter 2012.
For full year 2011, Hurt projects an average profit of $6 per head for producers.