031013 Report Indicates Pork Liquidation Ending

Washington - It looks like the liquidation phase in the pork industry is coming to an end, analysts said following the release of the Quarterly Hogs and Pigs Report by the U.S. Department of Agriculture last week.

“If we continue to push weights up and with the farrowing intentions for December to February at 100%, we could have more pork in 2004 than in 2003,” said Len Steiner, president of Steiner Consulting Group, Manchester, N.H. “I think the numbers are reasonably inline with expectations but everything was a little higher.”

As of Sept. 1, the U.S. inventory of all hogs and pigs was 59.623 million head, down 2% from one year ago. The breeding inventory was down 3% from last year at 5.882 million head and the market hog inventory was estimated at 53.741 million head, down 2% from the 2003 number.

“The big surprise was that we can continue to farrow 2.8 million sows per quarter regardless of the breeding herd,” said Bob Brown, meat industry consultant, Edmond, Okla. “So what appears to be happening is as the smaller operations continue to drop out, the weighted average of the whole system continues to grow.”

On a national average, Brown expects the dressed weights will top 200 pounds this fall. “The productivity is not showing up in the pigs per litter – it’s showing up in the litters per sow per year,” he said. “There has to be some physical limit to that, but we haven’t found it yet.”

For June through August, the pig crop totaled 25.150 million head, 2% down from last year, and sows farrowed during that period was estimated at 2.826 million head, also down 2% from 2003. Pigs per litter were 8.9 head, which was unchanged from one year ago.

As of Sept. 1, the market hogs by weight groups were estimated for under 60 pounds, down 1% from last year; from 60 to 119 pounds, down 1% from last year; for 120 to 179 pounds, down 2% from last year; and for the 180 pounds and over group, down 5%.

“What caught my eye was the market hogs from the 60- to 119- and 120- to 179-pound groups,” Brown said. “When you add those two groups together, the numbers are only down 1% from a year ago and that will be the majority of our slaughter hogs for October to December.”

If the futures market for October to December is on par with current cash markets, “they’re still looking for slaughter to be down 2% to 4% and I think they might be disappointed,” he said. “Over the longer term, it will be interesting to see how the relationship between pork and beef develops, since we are looking at record-high beef prices,” said Jim Mintert, extension livestock economist at Kansas State University, Manhattan, Kan.

“We’ve got beef prices at a strong level to pork prices and for the fourth quarter I think that will be supportive to the pork complex,” Mintert added. “Retailers are making pork purchases because it is difficult for retailers to make plans for a major beef feature with the beef running at record high prices.” Steiner encouraged hog producers to watch the currency exchange rates. “If the U.S. dollar is weak, U.S. pork in the world market becomes a value,” he said. “But if the U.S. dollar gains strength, be careful.”

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