Is It Only Disease Taking a Big Bite Out of U.S. Hog And Pig Supplies?
U.S. Farm Report 09/24/22 - Roundtable 1
The June Hogs and Pigs report from USDA showed the U.S. swine inventory was down 1% at the start of June. The decline of the nation’s hog herd has been a trend for nearly a year, as one livestock economist doesn’t see the herd numbers recovering in the USDA’s next report set to be released this week.
Lee Schulz of Iowa State University says a year ago, porcine reproductive and respiratory syndrome (PRRS) was continuing to spread across hog operations, and the extent of losses were still largely unknown. In the 12 months since, Schulz says the supply side is still a concern.
“I think what we've seen come to fruition is the decline in supply,” says Schulz. “And really, you could characterize it as a bit of a retrenching in the industry where we've seen some taking a step back on the supply side and really take a breath here to adjust to the higher costs scenario that we're all facing.”
According to Iowa State’s analysis, producers saw their cost of production at a record $100.42/cwt in July, which was up $0.24 from June. Declining corn prices this fall should pull down cost of production a bit. Yet, margins were still in the black. Schulz says Iowa State estimated farrow-to-finish hog profitability hit $40.63 per hog marketed, and that made the sixth consecutive profitable month for hog sales.
“We're seeing disease pockets out there, and that's impacting productivity,” he adds. “There's really not a lot of incentive to expand at this point. That's why I think you're seeing these supplies really hold tight, waiting for the market to react to either higher prices or maybe taking a step back in costs.”
The cost side of the equation is still a concern for the industry, as is disease. However, another major factor to watch is labor.
“When you look at the pigs saved per litter, we've typically seen a 1% to 1.5% year-over-year increase, and we're still at 0.5%,” says Schulz. “I think some of that can be attributed to disease. Some is due to the labor constraints we're facing. That’s something to really watch going forward, as I think what we could see from an expansion standpoint is productivity take off, as well as the breeding herd."
USDA is set the release the Hogs and Pigs report on Sept. 29.
