U.S. Hog Inventory Drops 2 Percent

Liquidation in the U.S. hog industry is continuing, and smaller supplies should be supportive of prices by mid-2009.

“Things will get better by Easter, perhaps, and I’m optimistic for this summer,” says John Lawrence, an ag economist at Iowa State University, who participated in a recent Pork Checkoff-funded ag media teleconference to discuss USDA’s latest Quarterly Hogs and Pigs Report.

The U.S. inventory of all hogs and pigs on Dec. 1 totaled 66.7 million head, down 2 percent from both Dec. 1, 2007 and Sept. 1, 2008. The breeding inventory, at 6.08 million head, was down 2 percent from last year but up slightly from the previous quarter. The market hog inventory, at 60.6 million head, was down 2 percent from both last year and last quarter.

The September-November 2008 pig crop, at 28.4 million head, was down 4 percent from 2007 but up 6 percent from 2006. Sows farrowing during this period totaled 2.99 million head, down 6 percent from 2007.

Based on Iowa-southern Minnesota live prices, Lawrence predicts first-quarter prices of $43 to $46, second quarter prices of $57 to $61, and third quarter prices of $59 to $63 for 2009.

U.S. hog producers intend to have 2.97 million sows farrow during the December 2008-February 2009 quarter, down 3 percent from the actual farrowings during the same period in 2008 but up 2 percent from 2007. Intended farrowings for March-May 2009, at 3.01 million sows, are down 2 percent from 2008 and down 1 percent from 2007.

“Although there’s still a lot of uncertainty, it looks like we’ll be moving into a period in 2009 where producers can cover variable costs more easily,” says Dale Durcholz, a senior livestock analyst with AgriVisor Services in Bloomington, Ill., who tends to be a little more defensive on third-quarter prices than Lawrence. 
                                                                               

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