Following the release of the Hogs and Pigs inventory report in June, Lee Schulz, livestock marketing specialist with Iowa State University Extension, joined AgriTalk to discuss his initial thoughts on the data.
While Schulz says there weren’t any major surprises, he noted that there was one unexpected statistic.
“The big shocker to me in this report is when you look at productivity. We’ve seen pigs saved per litter up 3.3%,” Schulz notes. “We haven’t seen that in a long time, you have to go back to 2019. And then even before that, it’s kind of when we were coming out of [Porcine epidemic diarrhea virus]. So that pigs saved per litter, the productivity, kind of masked what we’ve seen in lower sows farrowing and our pig crop was actually larger year over year.”
Averaging 11.36 pigs per litter in the U.S. in the recent report, Schulz believes this pigs saved per litter number is higher due to two main reasons. First, “middling” the last several quarters, due to higher disease incidents and production struggles from last year likely played into lower numbers, Schulz notes. Second, sow liquidation has likely caused producers to cull some of the least productive sows or bring in more productive gilts, which may have led to the overall average increase.
Meanwhile, the “kept for breeding” statistic only decreased by 0.4%, which Schulz believes it may be suggesting some stabilization in the industry, fueled by some optimism in the market or adding more gilts.
“You know, when I’m discussing these inventory numbers, I’ve been talking about asset fixity and asset specificity. I think we’ve made a ton of investments over the last several years, and to make dramatic changes in inventories would be difficult. And so, I think some of that is showing the tale here that, you know, we’re holding some of those inventories because of that investment,” Schulz adds.
When it comes to looking at the total number of market hogs, Schulz explains how it’s important to break it down by category.
“The 180 lbs. and over [hogs] most of those have been slaughtered already. So that’s what I think we’ve seen in in the marketplace here and it’s been supportive of prices because maybe slaughter has been a little bit tighter than we’ve seen over the last several weeks and months,” Schulz explains.
He adds that pre-report expectations, the lighter two categories were about one percentage point larger, but that shouldn’t scare the market, because of the larger amount of time remaining before those hogs come to market.
While inventories show larger year over year, Schulz is not concerned with packing capacity to be able to run these hogs through the system.
Also in the report, farrowing intentions for the next two quarters, June through August and September through November, were down 3.9% and 4.5% respectively.
Schulz notes that these will likely be revised, as the breeding herd number remains relatively large.
Overall, Schulz believes the report was relatively neutral to slightly bearish.
“I think it depends on how we interpret this. I mean, most numbers were within pre-report expectations, so that shouldn’t really surprise us, especially in the short run. Maybe the breeding herd’s a little bit larger than we expected, but we also have those farrowing intention numbers rather pessimistic here. So, all in all, I have to call it pretty neutral until I dig into this more and see how maybe we can interpret that,” he explains.
The full Quarterly Hogs and Pigs inventory report, released June 29, can be found here.
