USDA’s December Hogs & Pigs Report, released on Dec. 30, showed across the board declines from year ago levels in all categories. Specifically, the results compare to Dec.1, 2001 levels as follows:

2002 USDA Hogs & Pigs Report
All hogs and pigs, -1.4%
Breeding herd, -3.2%
Market hogs, -1.2%

Market hog weight breakdowns:
> 120 lbs., -2.3%
60-119 lbs,, Unchanged
< 60 lbs., -2.1%

Farrowings and farrowing intentions:
September/November, -2%
December/February, -1%
March/May, -3.1%

USDA’s final Dec. 1, 2002 numbers were in line with pre-report estimates, which analysts say may cause some short-term price pressure in the futures markets this week. However, the long-term outlook is somewhat brighter for pork producers.

The 6.12 million head breeding herd is the smallest on record, and reflects producers commitment to getting supplies more in line with demand.

“We’re going to have a modest decline in first-quarter 2003 market hog slaughter, “ says Chuck Levitt of Alaron Trading. He looks for a 23.5-million head commercial slaughter in the second quarter, 23.5 million in the third quarter, and just less than 26 million for the fourth quarter. “For the year, I look for a 98-million head commercial slaughter—including Canadian hogs. In 2002 we slaughtered 100 million.” Levitt believes this will translate to a 2003 average live-hog price that’s 20 percent higher than 2002.

Chris Hurt, Purdue University agricultural economist, and John Nalivika of Sterling Marketing, provide the following live-hog price projections:

2003         Hurt  Nalivika
1st quarter  $39   $34.50
2nd quarter  $43   $41.50
3rd quarter  $39   $46.50
4th quarter  $36   $40.50
2003 average $39.6 $40.50

Hurt’s 2003 average price compares to $35 for 2002. He pegs the average cost of production for 2003 at $39, but notes that break even prices vary greatly by operation.