September U.S. Hog Inventory Breaks Records

( National Pork Board and the Pork Checkoff )

Analysts believe black ink and a profitable year are ahead for the typical pork producer. Friday’s September Quarterly Hogs and Pigs Report came in with the highest Sept. 1 inventory of all hogs and pigs reports since the estimates began in 1988. 

According to USDA’s count of all hogs and pigs on Sept. 1, 2019, total inventory was 77.7 million head, up 3% from a year ago and up 3% from June 1.

The market hog inventory on Sept. 1 was 71.2 million, up 4% from last year and 3% from the previous quarter.

The number of pigs kept for breeding came in at 6.43 million head, up 2% from a year ago, and up slightly from last quarter. 

The June-August 2019 pig crop, at 35.3 million head, was up 3% from 2018. Sows farrowing during this period totaled 3.18 million head, down 1% from 2018. The sows farrowed during this quarter represented 50% of the breeding herd. The average pigs saved per litter was a record high of 11.11 for the June-August period, compared to 10.72 last year. 

A Growth Industry
The September Hogs & Pigs Report felt a little bit larger than pre-report estimates, says Joe Kerns, president of Kerns and Associates in Ames, Iowa. 

“We are in a growth industry. I think this is a healthy problem that we have – that we continue to raise more animals is not an accident and I think it’s a sign of some optimism within the industry,” he says.

The most pronounced number to Kerns from the report was the pigs saved per litter at a new record of 11.11. He says this is consistent with the anecdotal information that he picks up from producers. Between the progress of genetic companies and improved practices in the barns, producers continue to save more and more pigs. 

With the dynamic forces at play now, specifically with what the exports look like and the promise of what China is bringing, Kerns says the optimism on the board is certainly not going to discourage very many people from continuing to produce what the prospects of tomorrow bring.

“I think that collectively we were holding our breath, hoping that we didn't get a great big surprise. Even though these numbers are slightly larger than average analysts’ expectations coming in, I think we can exhale and start to focus on some more market-driven forces to dictate what the market does from here forward,” Kerns says.

Record-Breaking Slaughter
A record market hog inventory means lots of hogs that will ultimately result in record slaughter.

Ron Plain, professor emeritus at the University of Missouri, says the industry is already experiencing some of that. During the week ending Sept. 14, the official inventory just came in at 2,632,118 hogs harvested, the second biggest week ever after Dec. 22, 2018. For the week ending Sept. 27, the preliminary hog slaughter total is at 2,646,000, up 14,000 from two weeks earlier, Plain says. 

“We had a new daily record this month with 491,000 head slaughtered on Sept. 10, which by my data, is the biggest slaughter day ever,” Plain says. “Lots of pigs, lots of records and looks like we have enough capacity to handle it.”

Plain noted, however, that the market hog inventory is not evenly distributed.

USDA reported 22.616 million head in the under 50 pounds category, a 1.9% increase from a year ago. In the 50-119 pounds category, the count came in at 20.849 million, up 2.4%. In the 120-179 category, there were 14.814 million head, up 5.3%, somewhat larger than analyst predictions of 3.6%. And rounding out the 180+ pound category, the count came in at 12.969 million head, up 6.4% from a year ago compared to analyst expectations of 4.3%.

“We’re going to have plenty of hogs to process – lots of pork this fall – still more pork in the winter than a year ago, but not quite as burdensome as it might be in the next few weeks,” Plain says. 

The Bet’s on China
The question on Len Steiner’s mind, however, is who will eat all this pork? 

“Currently we're estimating that next year we're going to have to export about 26.2% of all the pork production in the country. And if we fall short of that, we probably have more pork than we can get consumed at reasonable prices in the United States,” he says.

The bet is on China, says Steiner, president of Steiner Consulting Group in Merrimack, N.H.

“If China comes in here for big numbers, our 26.2 may be too light. In which case, you know, hog prices will be getting higher,” Steiner says. “But it’s an awful big bet for this industry on how quickly the export market is going to continue to develop.”

He adds that nobody in China is giving him insight into what they're going to do. 

More from Farm Journal's PORK:

Markets Jump on Skyrocketing Hog Inventory

Massive Pork Supply Comes as No Surprise in Hogs and Pigs Report

Max Supply & Trade Turmoil Underlies December Hogs and Pigs Report