2020 won’t be a year that analysts look back on and try to compare against. Disappearing hogs and a disrupted supply chain have been an anomaly. In USDA’s Dec. 1 Quarterly Hogs & Pigs Report, analysts said the decline of the breeding herd stood out as one of the more important numbers, and spoke to the uncertainty of overall supplies for summer and fall 2021.
There’s a whole lot of uncertainty, which is something we’re all going to be dealing with as we move into 2021, said Dale Durchholz of Grain Cycles, during a teleconference funded by the Pork Checkoff on Wednesday.
First, a Look at the Numbers
The total inventory for all hogs and pigs on Dec. 1 was a 77.5 million head, reported economist Steve Meyer of Kerns & Associates. That’s down 1% from a year ago and down 1% from Sept. 1.
The market hog inventory on Dec. 1 was 71.2 million, down 1% from 2019 and down 1% from the previous quarter.
The breeding inventory numbers came in at 6.28 million head, down 3% from a year ago and down 1% from Sept. 1. The September to November 2020 pig crop, at 35.0 million head, was down 1% from 2019. The number of sows that farrowed during this three-month period was down 1% from 2019 at 3.16 million head, which represents 50% of the breeding herd. The average pigs saved per litter was 11.05 for the September to November period, compared with 11.09 last year.
U.S. hog producers intend to farrow 3.12 million sows during the December 2020 to February 2021 quarter, up 2% from the actual farrowing during the same period in 2019 and up 1% from the same period in 2018. Intended farrowings for March to May 2021, at 3.12 million sows, are down 1% from the same period in 2019, but up slightly from the same period in 2018.
Revisions and More Revisions
All inventory and pig crop estimates for March 2019 through September 2020 were reviewed using final pig crop, official slaughter, death loss and updated import and export data, USDA reported. The revision made to the September 2020 all hogs and pigs inventory was 0.8%. A revision of 2.7% was made to the June to August 2020 pig crop. The net revision made to the June 2020 all hogs and pigs inventory was 2.9%. A net revision of 0.8% was made to the March-May 2020 pig crop. The net revision made to the March 2020 all hogs and pigs inventory was 1.9%. A net revision of 2.8% was made to the December 2019 to February 2020 pig crop. The net revision made to the December 2019 all hogs and pigs inventory was 1.2%. A net revision of 1.0% was made to the September to November 2019 pig crop.
“The biggest surprise for me was an upward revision in the June to August pig crop. They raised that pig crop almost a million head,” said Bob Brown, an independent market analyst. “The revisions surprised all of us – how extensive they were – especially those market hog weight categories in the September report, they were pretty wild.”
Reaching back to last December to make revisions is unusual, Brown noted. But 2020 was anything but usual.
Breeding Herd Drops
For Altin Kalo, senior analyst with the Steiner Consulting Group, the breeding herd number stood out as one of the biggest surprises in the Dec. 1 Hogs and Pigs Report. According to his calculations, gilt retention during the last quarter was about 6% lower than it was a year ago.
“By the end of the September to November quarter, the breeding herd was 6.276 million head, 3% lower than it was a year ago,” Kalo said. “It is the smallest breeding herd we’ve had since early 2018.”
To put it into perspective, he said the last time the industry saw that type of decline in the breeding herd was December 2014.
“To me, it underscores some of the decisions and some of the issues producers are having to deal with – uncertainty in the domestic market as far as demand is concerned. When is demand going to start to kick in? What’s going to happen with export demand? And then you have the uncertainty regarding your feed costs,” Kalo added.
A Challenging Year To Measure Against
Th final arbiter of everything is the number of hogs slaughtered, Durchholz said. The difficulties in slaughter in the past year continue to pose challenges for analysts trying to forecast what’s ahead.
“How many hogs were potentially euthanized, which we really don’t know, creates a real nightmare from an analyst to utilize their last year’s numbers as a basis.,” Durchholz said.
2020’s data is always going to be an anomaly we’ll never be able to rectify. He said the industry really needs to step back and look at data in reference to 2019 or 2018, or a whole series of years, instead of trying to compare to 2020 because of the disruption in the slaughter stream.
Is the Backlog of Market Hogs Over?
Is the industry still backlogged with market-ready hogs? Ultimately that’s a question everyone needs to decide at some point for themselves, Brown said. From his analysis, he does not think there is a backlog.
“My argument all along has been there were some backups. They were probably more so on the packer side than they were on the producer side,” Kalo said. “If you look at a breakdown of weights by who owns those hogs, weights on packer-owned hogs have been incredibly high through the fall. Part of it is because they can manage better than producers can. They own the packing plant, so they can schedule those hogs when they come in. But in some cases, the weights on those hogs were 4.5% to 5% higher than a year ago.”
Just last week, Meyer said the average of producer-sold barrows and gilts was 215 pounds, while packer-sold barrows and gilts came in at 222.7 pounds for a difference of 7.7 pounds based on who owns them.
“My thought the last few weeks has been anywhere west of North Carolina is pretty well caught up,” Meyer added. “But if you look at how the plants in the Carolinas and Virginia and that part of the world have been able to run, they have had operational problems all along during the summer that backed up a lot of pigs. It shows up in these packer-raised versus producer-sold barrows and gilts and I think that’s a pretty good barometer of what’s going on there.”
The packer-owned weights made new highs for the year in November, Brown added.
“Producer-owned hogs have done a better job of keeping the weight more toward current marketings. Basically, what this says is, producers it will do you well to keep your hogs current,” Brown said.
More from Farm Journal’s PORK:
Economists Forecast Hog Prices Following USDA Quarterly Report
Hogs and Pigs Report: A Dose of Reality and a Little Magic
AgriTalk: Final Days of 2020 Provide Hope for Pork Producers
2021 U.S. Pork Outlook: Volatility and A Little Optimism
3 Ways to Lessen the Impact of High Feed Prices in Pork Production
