Hog prices have fallen far below break even levels and there are worries about the number of hogs headed to market in the fall. A Purdue University report says the numbers may exceed packer plant capacity and a recent USDA September Hog and Pig report didn’t help the situation as numbers are three percent higher this year. Animal numbers in the heaviest categories were up four percent. The number that brought the greatest concern in the September report was packer head counts were up by eight percent. Slaughter capacity is about two percent higher than the headcounts over the past couple of weeks, but the USDA expects slaughter numbers to ease by the end of the year. If those USDA predictions are correct, packers should have enough capacity. Two new processing operations are scheduled to open in Iowa and Michigan in 2017, increasing slaughter capacity by another six percent. The recent squeeze on slaughter capacity has meant stronger packer margins. The increased capacity next year should reduce packer margins and provide higher prices at the farm level. However, that doesn’t help this fall and winter as losses are expected to be as large as they’ve been since 2012. Experts say expected losses in 2017 may lead to ideas of shrinking the breeding herd, and that could lead to higher prices returning in 2018.
From the National Association of Farm Broadcasting news service.
From: USDA
Quarterly Hogs and Pigs Report
United States Hog Inventory Up 2 Percent
United States inventory of all hogs and pigs on September 1, 2016 was 70.9 million head. This was up 2 percent from September 1, 2015, and up 4 percent from June 1, 2016.
Breeding inventory, at 6.02 million head, was up 1 percent from last year, and up 1 percent from the previous quarter.
Market hog inventory, at 64.8 million head, was up 3 percent from last year, and up 4 percent from last quarter.
The June-August 2016 pig crop, at 32.0 million head, was up 2 percent from 2015. Sows farrowing during this period totaled 3.02 million head, up slightly from 2015. The sows farrowed during this quarter represented 51 percent of the breeding herd. The average pigs saved per litter was a record high 10.58 for the June-August period, compared to 10.39 last year. Pigs saved per litter by size of operation ranged from 8.20 for operations with 1-99 hogs and pigs to 10.60 for operations with more than 5,000 hogs and pigs.
United States hog producers intend to have 2.93 million sows farrow during the September-November 2016 quarter, down slightly from the actual farrowings during the same period in 2015, and down 2 percent from 2014. Intended farrowings for December-February 2017, at 2.93 million sows, are down slightly from 2016, but up 1 percent from 2015.
The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 47 percent of the total United States hog inventory, unchanged from last year.
Read the full report.