|
About This Newsletter
|
Send Comments & Questions To
Dale Miller, Editor,
National Hog Farmer
To unsubscribe from this newsletter go to: Unsubscribe
To subscribe to this newsletter, go to: Subscribe
|
|
Hogs & Pigs Special Report
USDA’s quarterly Hogs and Pigs report, released on
Friday, was once again a mixture of bullish and bearish numbers with
market supplies a bit bearish and breeding herd numbers a bit bullish in
the long run. The key numbers in the report appear in Table 1.
Some highlights of the report are:- Sharply higher reproductive
performance. The 9.48 pigs saved per litter for Dec.-Feb. is the
highest ever for that quarter, the fourth highest since 1983 and the
highest mark since June-August 1996. The increase continues a string of
seven quarters of year-on-year growth of 1.8% or more with the Dec.-Feb.
2.6% increase being the largest. The increases coincide with two major
changes in the U.S. industry. First, producers began late in the
process of moving to later weaning ages on many farms. That change had
two main benefits: Higher quality pigs and larger litters in subsequent
litters due to allowing the sow a bit more recovery time. It appears to
be paying off. The other change was, of course, circovirus vaccines.
While most of the impact has been felt at the grow-finish level, the
vaccines have had a positive impact on sow units as well. As Figure 1
shows, litter sizes have been going up more quickly, matching the pace
set back in 1995-1997, a time of major structural change in the
industry.
- A smaller-than-expected U.S. breeding herd. USDA estimates that the
herd is at 6.011 million head, 3% smaller than last year. But will this
reduction result in fewer pigs? Given the growth of average litter
size, that is the question. Dec.-Feb. farrowings are right in line with
the breeding herd, so adding 2.6% from larger litters would drive pig
numbers close to last year, right? Wrong! The Dec.-Feb. pig crop is
pegged at 97.4% of last year in spite of 97% as many litters and litter
size at 102.6%. Those figures don’t fit, but we usually charge on
using the pig crop number which implies lower June-Aug. farrowing
intentions. But we will make a note to follow up on these figures in
future reports.
- Somewhat larger-than-expected middle-weight market hog inventories,
implying that the “shortage” of pigs this spring may not be as large
as I thought last fall. Recall that the Sept.-Nov. farrowings were
sharply lower (down 6%) than those of 2007 and that the Sept.-Nov. pig
crop was 3.7% lower than one year earlier. However, this report says
that the two weight categories comprised of those pigs are only 2.5%
smaller than last year. Those are 1.3% larger than analysts expected,
so that may take some luster off the May, June and July contracts on
Monday (March 30). We will watch closely over the next few weeks to
discern whether slaughter follows the December report pattern more or
less than this pattern from the March report.
- Summer farrowing intentions that are reasonably in line with the sow
herd, but lower than analysts’ predicted. These could be bullish for
deferred contracts.
Canadian Imports Hold the Key
The trick for predicting supplies using this report has nothing to do
with the report. It is how far imports of Canadian pigs will decline
this year vs. last year. Market hog imports will impact slaughter
immediately, while reduction in weaned/feeder pigs imports will reduce
slaughter 20-24 weeks later. I use 21 weeks, realizing that it may not
be 100% accurate.
Figure 2 shows my forecasts for weekly slaughter levels using reductions
of from 2% down to 0.4% down for lower market hog imports through
year’s end. I also reduced future slaughter by 2% starting in early
August when early March imports would be ready for market. My feeder
pig import reduction falls gradually to 0.4% in Q1-2010.
The net impact of the March report is to increase my forecast for 2009
federally-inspected slaughter marginally to 110.5 million head, 3.5%
lower than that of 2008. Those numbers compare to my December forecasts
of 110.456 million head, 3.6% lower than in 2008.
If the March report is correct, then the quarterly patterns will change
a bit, though with Q2 being higher and Q3 being lower. I expect Q2
slaughter to be 3.4% lower while Q3 slaughter is 4.9% lower. Q4
slaughter will be 3.6% lower, but will still amount to 28.498 million
head.
As predicted in December, the first quarter of 2009 has indeed been a
tough one. National weighted average net price averaged $56.91/cwt.,
carcass, through last week, about $2/cwt. lower than my Q1 forecast
coming out of the December report, which in spite of Q1 slaughter, has
been about 1% lower than I expected.
I now expect the average national weighted average net prices for both
Q2 and Q3 to be in the range of $74 to $78/cwt., carcass. I expect Q4
prices to be in the $61-$64/cwt., carcass, range bringing the forecast
range for the 2009 annual average to $66 - $69/cwt., roughly $1 lower
than I had forecast in December.
Watch this week’s North American Preview for my normal table
including the slaughter and price forecasts of several noted analysts.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
North American Preview would like to thank our sponsors, PIC, Boehringer Ingelheim and Novartis Animal
Health US, Inc.
|
|
You are subscribed to this newsletter as #email#
To get this newsletter in a different format (Text or HTML),
or to change your e-mail address, please visit your profile
page to change your delivery preferences.
For questions concerning delivery of this newsletter, please contact our
Customer Service Department at:
National Hog Farmer
A Penton Media publication
US Toll Free: 866-505-7173
International: 847-763-9504
Email:nationalhogfarmer@pbinews.com
Penton Media | 249 W. 17th Street | New York, NY 10011
Copyright 2008, Penton Media. All rights reserved. This article is
protected
by United States copyright and other intellectual property laws and may
not be reproduced, rewritten, distributed, re-disseminated, transmitted,
displayed, published or broadcast, directly or indirectly, in any medium
without the prior written permission of Penton Media.
|
|
