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Hog farm barns pigs FDS operation.JPG National Pork Board

‘Hogs & Pigs’ report in line with expectations

Analysts' price forecasts include expectation of increased exports.

The U.S. Department of Agriculture released the latest quarterly “Hogs & Pigs” report on March 28, revealing numbers mostly in line with pre-report estimates.

According to the report, the U.S. inventory of all hogs and pigs on March 1, 2019, was 74.3 million head, a 2% increase from March 1, 2018, but down slightly from Dec. 1, 2018.

march 19 hogs and pigs.png

Breeding inventory, at 6.35 million head, was up 2% from last year and up slightly from the previous quarter. Market hog inventory, at 67.9 million head, was up 2% from last year but down slightly from last quarter.

The December to February 2019 pig crop, at 33.0 million head, was up 3% from 2018. Sows farrowing during this quarter totaled 3.08 million head, up 2% from 2018 and representing 49% of the breeding herd. The average pigs saved per litter was a record high of 10.70 for the December to February period, compared to 10.58 last year.

The report showed that U.S. hog producers intend to have 3.12 million sows farrow during the March to May 2019 quarter, up 1% from actual farrowings during the same period in 2018 and up 3% from 2017. Intended farrowings for June to August 2019, at 3.19 million sows, are down slightly from 2018 but up 3% from 2017. Analysts had expected this to be up 2.3%, making it the largest discrepancy between pre-report estimates and the actual USDA numbers.

USDA reported that the total number of hogs under contract owned by operations with more than 5,000 head but raised by contractees accounted for 47% of the total U.S. hog inventory, unchanged from the previous year.

USDA reviewed all inventory and pig crop estimates for March 2018 through December 2018 using final pig crop, official slaughter, death loss and updated import and export data. The net revision made to the September 2018 all hogs and pigs inventory was 0.5%. A revision of 0.5% was also made to the June to August 2018 pig crop.

“We continue to have plenty of hogs; there is no doubt about that,” John Nalivka, president of Sterling Marketing, said during a post-report conference call hosted by the National Pork Board.

Kevin Bost, president of Procurement Strategies, said during the call that he was looking for some evidence in the report that the pace of expansion was changing — either increasing or decreasing — but “didn’t get any evidence.”

“I think that it’s important to point out that we do have a bigger hog supply and a bigger pork supply coming,” Bost said. “Without making any bold assumptions about carcass weights, I’ve got pork production running pretty much about 3-4% above a year earlier about as far out as I can see.”

Price forecasts

Kevin Grier, president of Kevin Grier Consulting & Analysis, provided his forecast using the CME lean hog index. He relayed that his forecast included an expectation of 25-30% export growth. He forecasted $88/cwt. for the second quarter, $98-100/cwt. for the third quarter and $88/cwt. for the fourth quarter.

Bost is also banking on growth of about 10% year over year in total U.S. pork exports and a 31% year-over-year increase for the third and fourth quarters. Using the CME lean hog index, he forecasted $81/cwt. for the second quarter, $82 for the third quarter and $70 for the fourth quarter.

Using the western Corn Belt price as a basis, Nalivka forecasted prices to be in the mid-$60s in the second quarter, the low to mid-$70s in the third quarter and the low $60s in the fourth quarter.

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