Speculation that the PED virus had greatly reduced pig numbers took lean hog futures prices to astounding heights. Now, markets have a better understanding that while the PED virus certainly did its damage, death loss may have been over anticipated in February and March and that producers have been able to compensate for a substantial portion of lost animals by much higher weights.
There are still critical question surrounding the disease that have to be answered. The first is, what were baby pig death losses from January through March that will determine July through September slaughter supplies? And second, will the impacts of PED-V or a related virus return next winter?
As it turns out, the March Hogs and Pigs inventory count from USDA provided reasonable estimates of the impact of death loss from PED-V. USDA's estimate of the inventory of pigs weighing 50 pounds or more that formed the bulk of March, April, and May supplies was down 3.6 percent and the actual slaughter for those three months was down about 5.5 percent. Producers are compensating for the smaller head count with sharp increases in market weights. In January and February, weights were up about two percent above the average in the previous year. Once hog prices soared to record highs in February and March, producers have continuously increased weights. In the month of May, live weights reached 4.7 percent above the weights in May a year earlier. Clearly, weights are substantially compensating for lower animal numbers.
For this year-to-date, the total number of hogs coming to market has been down four percent, but weights have been up three percent so that the total supply of pork has only been down a modest one percent compared to the first five months a year-ago. The biggest declines in hog numbers so far this year were in the months of March-down seven percent, and in April-down five percent. Slaughter numbers were only down four percent in May.
While there is always some questioning of USDA counts, the reasonable accuracy of the March report provides some added confidence in their numbers headed into the summer. That report suggested the number of pigs available for market in June, July, and August would be down about four percent. Assuming that weights continue to be three to four percent higher, this implies pork supplies for the summer will be unchanged to down one percent relative to the summer of 2013. Such prospects are hardly a ringing endorsement for super high prices of hogs.