USDA will release its December Hogs & Pigs Report on Dec. 30, at 3 p.m.(CST). Ahead of the report, Ron Plain, University of Missouri agricultural economist, estimates that the breeding herd is 3 percent smaller than on Dec. 1, 2007. Plain also estimates the market hog inventory 2.5 percent smaller, and the total herd down 2.6 percent.

USDA is expected to make some downward revisions in its previous estimates since September through November hog slaughter was 4 percent lower than expected based on the September Hogs & Pigs Report. Half of the drop was due to a 56 percent decline Canadian slaughter hog imports. The other half appears to be due to fewer U.S. raised hogs, Plain said in his Swine Economics Report.

In September, USDA predicted September/November farrowings to be 5.5 percent smaller than the previous year earlier and December/February farrowings down 2.9 percent. "I'm going with fall farrowings down 5 percent and winter farrowings down 3 percent," said Plain. "I'm forecasting spring farrowings to be down 3 percent compared to March/May 2008. Record feed prices have caused the financial losses that are driving this cut back. Through November, sow slaughter was 6.4 percent higher than a year ago."

Plain also is looking for the pigs-per-litter number for the fall to be up 1.5 percent, making the September/November pig crop 96.5 percent of a year ago. Feeder pig imports this fall were below last year's level, so the lightweight market-hog inventory should be down more than the fall pig crop.

"My estimates of the Dec. 1, market-hog inventory by weight groups are: 180 pounds and heavier 99.5 percent, 120 to 179 pounds 98.5 percent, 60 to 119 pounds 97.5 percent, and less than 60 pounds 95.8 percent of a year-earlier levels."

He goes on to point out, "My estimate of hogs in the 60 to 179 weight groups implies that daily hog slaughter in during first quarter 2009 will drop more than 2 percent below 2008 levels, if the inflow of slaughter hogs from Canada continues to be down. I expect live-hog prices to average close to $46 per hundredweight ($60 per hundredweight carcass) in the first quarter of 2009."

Plain projects second-quarter hog slaughter to be 5 percent lower than the number slaughtered in April/June 2008. If that's the case, he expects second-quarter hog prices to average close to $55 per hundredweight on a live basis and $72.5 per hundredweight on a carcass basis.

Source: Ron Plain, Swine Economics Report