USDA’s second quarter inventory of all hogs and pigs on June 1 was 72.4million head, up slightly from last year but down 1% from the March 1 inventory. The total inventory was up roughly 80,000 head and exceeded the range of pre-report estimates.
The breeding inventory, at 6.15 million head, was down slightly from last year, but up 1% from the previous quarter. Market hog inventory, at 66.2 million head, was up slightly from last year, but down 1% from last quarter.
The March-May 2023 pig crop, at 32.9 million head, was up 1% from 2022. Sows farrowing during this period totaled 2.90 million head, down 2% from 2022. The sows farrowed during this quarter represented 48% of the breeding herd. The average pigs saved per litter was 11.36 for the March-May period, compared to 11.00 last year.
“The March to May pig crop was up almost 1% from last year and much higher than what analysts were expecting,” said Tyler Cozzens, agricultural economist at the Livestock Marketing Information Center, Denver. “Analysts actually expected a decrease of about 1%.”
Productivity also provided a surprise as pigs per litter rose from 11.0 last year to 11.36 pigs per litter in 2023.
“That is well above the average of the pre-report estimates,” Cozzens said.
Farrowing intentions have been scaled back, the data suggests, likely the result of negative margins. USDA reports producers intend to farrow 2.94 million sows during the June-August quarter, down 4% from the same period last year, and down 4% from the same period two years ago. Further, farrowing intentions for the September-November quarter at 2.95 million sows, is down 4% from the same period last year and down 3% from two years ago.
Economist Steve Meyer, Partners for Production Agriculture, says three key issues will drive pork markets in the coming months.
The first is California’s Proposition 12, which he described as a one-time political issue, then a judicial issue and now a marketing issue. The second issue is declining pork demand since good demand years in 2021 and 2022, and finally, Meyer says rising production costs will have a significant impact going forward.
Proposition 12 enforcement begins July 1, and Meyer said he expects some market impacts in the second half of the year as the industry adjusts to the new regulations. Some product that is disallowed from California will need to find a market somewhere else in the U.S.
Aside from new regulations, Meyer said the “cost challenge is significant” for pork producers. His recent estimates put cost of production at $94 per cwt. for market hogs through 2024.
“And that that number is 44% higher than where we were in the five-year period between 2016 and 2020,” Meyer said. “This is a serious situation for U.S. pork producers.”
AgDay’s Michelle Rook visits with Jeff Hoogendoorn, Professional Ag Marketing, for his insights from the report.
