The June 1 USDA Hogs and Pigs Report that was released on Friday June 26th continues to support forecasts of domestic pork production levels that surpass prePorcine Epidemic Diarrhea virus (PEDv) pork production levels. The June 1 total hog inventory was reported 9 percent larger than on June 1, 2014. The breeding herd experienced a 1-percent increase year over year at 5.93 million head. Most notably, the industry has seen significant recovery in quarterly pig crop estimates as a result of continual gains in productivity.
With a reduction in the number of PEDv cases, pork producers are getting excellent productivity (pigs per litter) out of the sows they have farrowed. In the June report, USDA revised the December-February pigs per litter from 10.17 to 10.23, a record for the winter quarter (December-February). The spring quarter (March-May) productivity estimate was reported at an all-time record-high for all quarters at 10.37, a 6-percent increase relative to a year ago. Subsequently, the March-May pig crop was reported as being up 8 percent despite a modest 1-percent increase in farrowings in the same period. Actual farrowings in the March-May period totaled 2.850 million head, smaller than the 2-percent increase in producer intentions reported in the March report.
U.S. producers indicate they are planning to scale back on the number of sows farrowed over the next two quarters. Farrowing intentions for the June-August period were reported at 2.915 million hogs (down 3 percent year over year), while producers reflected a 4-percent decline in farrowing intentions for the SeptemberNovember period. It is interesting that producers are not reflecting an expected increase in farrowing intentions going forward, even though the breeding herd is currently larger than the previous year. In 2014, producers were farrowing more sows due to the very negative affect of PEDv on sow productivity. Now that productivity has recovered and is nearly back to trend, it will not take much increase in the breeding herd to expand hog numbers. Nonetheless, when compared to pre-PEDv farrowing estimates of 2013, June-August farrowings this year are expected to be 1 percent higher, while the September-November farrowings are reflecting a 3-percent increase.
As mentioned earlier, a larger March-May pig crop suggests increased availability for slaughter hogs in the fourth quarter. In addition, the combination of larger volumes of live hog imports from Canada and heavy dressed weights are expected to result in total commercial pork production of 24.58 billion pounds in 2015, a year-over-year increase of 7.6 percent.
Hog and pork prices for the remainder of 2015 are expected to reflect larger hog inventories and expanding pork production levels. However, higher prices for substitute animal proteins—mainly beef—should provide some support for the domestic pork market. Prices of live hogs (51-52 percent lean) are expected to average $53-$55 per cwt for the third quarter, $45-$49 per cwt in the fourth quarter, and $50-$51 per cwt for the year.
U.S. Pork Exports and Live Hog Imports Higher In May
U.S. pork exports in May were reported at 437.5 million pounds, up 1.5 percent relative to a year ago. Exports to South Korea declined from the previous month but remain strong when compared to May 2014 exports. Combined China and Hong Kong imports totaled 37.4 million pounds of U.S. pork in May, but shipments are down nearly 51 percent year to date. Lower domestic pork prices in the second half of 2015 relative to 2014 could potentially spur increased demand for U.S. pork abroad despite the underlying strength of the U.S. currency. USDA has revised the 2015 annual pork export forecast higher by 145 million pounds to 5.065 billion pounds. U.S. pork imports in May were 81.6 million pounds, down 2.3 percent from a year ago. Due to plentiful domestic pork availability; demand for imported pork is likely to wane through the remainder of the year. USDA has revised the annual pork import forecast lower by 75 million pounds to 1.083 billion pounds.
Live swine imports from Canada in May totaled a little over 419,000 head, 6.7 percent above a year ago. All categories of finishing animals (isoweans and feeder pigs) and slaughter hogs were seen higher year-over-year. Based on the weekly
Canadian live animal import report WA_LS635 b (http://www.ams.usda.gov/mnreports/wa_ls635.txt ), year-to-date total live hog imports from Canada through June 27th ran about 12 percent higher than the same bperiod last year, the bulk of which were feeder pig imports. The weak Canadian dollar has created a strong incentive for Canadian hog producers to ship larger volumes of live hogs into the United States for a higher price than if they marketed those same animals in Canada. USDA revised total annual live hog imports higher to 5.3 million head for 2015.
Source: USDA