U.S. Pork Producers Are Open For Business, Kalo Says

( National Pork Board and the Pork Checkoff )

The latest Hogs and Pigs Report showed that U.S. supplies are growing, and U.S. pork producers are open for business, says Altin Kalo with Steiner Consulting Group in Manchester, N.H. 2019 production is expected to be almost 13% (3.1 billion pounds) higher than in 2014.    

“Hog futures have rocketed higher in recent weeks on expectations that tighter global supplies will bring more demand for US pork exports,” Kalo says. “The report confirmed the U.S. pork industry expansion remains on track and 2019 will once again see a record supply of hogs/pork come to market.”

According to the Daily Livestock Report compiled by Steiner Consulting Group, this was in line with market expectations and a breeding hog inventory on March 1 that was up 2% from a year earlier. 

“The hog breeding herd bottomed out in December 2013, just before the outbreak of the porcine epidemic diarrhea virus (PEDV) and contraction in pork supplies,” Kalo says. “Since then the U.S. hog breeding herd has increased by 10.3% and U.S. pork production in 2019 is forecast by USDA to be 27.444 billion pounds, 4.2% higher than a year ago. “

The breeding herd as of March 1 was estimated at 6.349 million head, 2.2% or 139,000 head bigger than the previous year.  

“Compare this other major global pork supplies,” Kalo says. “Per USDA, the breeding herd in Europe at the start of 2019 was 3% or 359,000 head lower, the breeding herd in Canada was about unchanged and the breeding herd in Brazil was just 0.2% or 5,000 head higher.”

Sows farrowed during the December 2018-February 2019 quarter came in at 3.084 million. Three months earlier, USDA-NASS reported expectations at 3.110 million sows. Actual farrowings came in 26,000 head below expectations of three months earlier.  

“This was the biggest downward adjustment for any quarter since 2016, but it is also consistent with profitability trends for hog producers during the second half of 2018, based on data from Iowa State University,” write the Daily Livestock Report authors.

In the just completed December-February 2019 quarter, actual farrowings came up short of intentions on December 1 by 26,000 head. Average profitability during the July-September 2019 quarter, based on Iowa State University data showed a loss of slightly more than $15 per head. 

On the other hand, farrowings in March-May 2018 surpassed producer stated farrowing intentions on March 1, 2018 by 43,000 sows which followed January-March 2018 hog production profitability that was a positive $6.59 per head. 

Profitability averaged about $8 per head loss during the first two months of 2019, the report said. The rally in hog prices during March may have moved hog producers back into profitability, but the quarterly average was still slightly negative. 

Data from USDA-NASS and Iowa State University compiled by the Livestock Marketing Information Center suggests actual farrowings in the March-May quarter could be within 10,000 sows of the stated intentions on March 1, with a bias leaning towards the positive side. The March 1 farrowing intentions were 3.119 million sows.  An additional 10,000 head gives a projection of 3.129 million sows as compared to 3.100 million sows farrowed in March-May 2018. 

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