In this file:


·         Pork producers pulling back for 2019?

·         Quarterly Hog Report Shows Continued Herd Expansion

·         Pork Industry: Some Recovery From Decade-Low Prices



Pork producers pulling back for 2019?


Jeannine Otto, AgriNews Publications (IL)

Jan 7, 2018


DES MOINES, Iowa — U.S. pork producers could be pulling back a bit on their herd expansion and for a few different reasons.


While U.S. pig numbers on Dec. 1, 2018, came in higher than a year ago, indicating an industry that still is expanding to meet demands, specifics about those numbers and how much some numbers different from expectations pointed toward a different trend.


“A little bit on the lower end of what’s been expected,” were analyst Alton Kalo’s words regarding the farrowing intentions numbers going into 2019.


Those numbers indicate December-February farrowing intentions at 3.11 million litters, up 2.5 percent from a year before and slightly larger than pre-report expectations of up 1.9 percent. This deviated significantly from pre-report estimates.


The September-November farrowings were 3.158 million litters, up 1.8 percent from a year ago and nearly exact with expectations of up 1.7 percent.


The March-May intentions, at 3.147 million litters, up 1.5 percent over a year ago, came in the same as the pre-report estimates.


Bob Brown, commenting on the September-November pig crop, which came in at 33.976 million head, 1.9 percent larger than a year ago and smaller than the pre-report estimates, which had that up 2.4 percent, agreed.


“It looks like we could possibly be rounding off the top here a little bit, kind of slowing things down just a little bit,” he said.


Brown is an independent livestock industry analyst from Edmond, Oklahoma.


Even if producers are starting to pump the brakes, there still will be plenty of bacon and hams and chops for consumers here and abroad.


“This September-November pig crop is primarily slaughter for March-May, so this will take us through the late winter and into early spring with plenty of hogs going forward,” Brown said.


One issue that was mentioned twice during the media call sponsored by the Pork Checkoff, following the release of the last hogs and pigs quarterly report for 2018, was the labor challenge faced by the U.S. pork industry.


Analyst Jim Robb referred to the labor issue as being one of a handful of factors that could be contributing to a slowing rate of growth as shown by the pigs saved per litter for the September-November time frame.


That number was 10.76, up two-tenths of a percent from a year ago and below pre-report expectations that had that number up seven-tenths of a percent.


“Some analysts have reported maybe some labor issues with the lack of ability to find labor,” Robb said.


Other factors also have contributed to a slower rate of growth...





Quarterly Hog Report Shows Continued Herd Expansion


Market Intel/American Farm Bureau Federation

January 7, 2019


USDA-National Agricultural Statistics Service’s  Quarterly Hogs and Pigs report provides a detailed inventory of breeding and marketing hogs, as well as the future supply of market hogs on a quarterly basis. Producers use this data to determine production and marketing strategies, while the industry uses it to assess the markets and future supply of product.


The most recent report, released Dec. 20, revealed a record December inventory of all hogs and pigs at 74.6 million head, an increase of 1.9 percent year-over-year and down slightly from September’s report. This 1.9 percent increase from December 2017 was mostly in line with analysts’ expectations of 2.7 percent, and the report offered no real surprises to the market. USDA announced breeding inventory at 6.33 million head, up 2.4 percent from last year but below the 2.8 percent that market analysts were expecting. USDA also pegged the marketing herd at 68.2 million head, up 2 percent over 2017 but below analysts’ expectations of 2.6 percent.


While this report is mostly in line with expectations, a larger storyline here is continuing supply growth. Every single report over the last four years has hit a quarterly record in terms of the total hogs and pigs inventory, with five of those quarterly reports hitting an all-time record number across all quarters. The U.S. has been producing a mountain of pork and has even more coming down the pipeline, with record pork production expected in 2019 as well. When the boom period of grain prices slowed after 2013, pork producers experienced a drop in their feeding costs as grain prices receded. Since then, there has been a steady increase in production as producers expanded capacity.


At 23.3 million pigs, Iowa continues to overshadow the nation’s pork production, accounting for nearly a third of all hogs in the U.S. North Carolina and Minnesota are in a race for second, accounting for 9.1 million and 8.9 million pigs, respectively. The top three pork producing states’ sheer size allows them to have a significant impact on the country’s trends; of the 1.4 million net increase in animals over 2017, Iowa, North Carolina and Minnesota accounted for 1 million of the increase. 20 states saw a decline in their hog inventory from 2017 to 2018, with the sum of those states totaling a 595,000-animal decrease. Iowa’s gain alone nearly wiped that out, with the state increasing its December inventory from 2017 by 500,000 pigs.


document, plus chart, inventory map, video report [2:59 min.]



Pork Industry: Some Recovery From Decade-Low Prices


By Chris Hurt, Successful Farming - 1/7/2019


 The U.S. pork industry has been expanding the breeding herd and growing since mid-2014. The rate of breeding herd expansion peaked in early 2018 at a 3.5% annual growth rate. Financial losses and heightened uncertainties from trade tariffs have reduced that breeding herd expansion rate to 2.4% currently. Financial losses are expected to persist again in 2019, but they won’t be as large as last year’s trade reduced prices. To get back to profits, the industry must secure more markets for U.S. pork or further reduce the rate of expansion.


Inventories of animals in the latest USDA Hogs and Pigs report were generally smaller than the trade had anticipated. The numbers indicated that pork supply estimates be revised somewhat lower for 2019. The breeding herd was 2.4% higher, and the market herd was about 2% higher.


The weight breakdowns for the market hogs indicate that first quarter slaughter will be nearly 3% greater than the previous year. Second-quarter hog numbers would drop to about 2% great.


Farrowing intentions for this winter are up 2.5%, but up only 1.5% in the spring. Market weights have been lower recently as producers respond to low hog prices and negative margins. This pattern of financial losses is expected to continue until the spring and encourage producers to market at somewhat lighter weights. These lighter weights will also help reduce total pork supplies in 2019.


For 2019, total pork supplies are expected to be up around 2% except for the summer quarter when they may be up closer to 3%. Thus for the year, pork supplies may rise by slightly over 2%. This is somewhat lower than my previous thoughts and gives some modest optimism to higher price expectations for 2019.


The year of 2018 was a bad year for hog prices and is another reason to be more hopeful for 2019. Prices in 2018 averaged only $45.92 per live hundredweight for 51% to 52% lean carcasses (USDA). This was the lowest annual price in a decade dating back to 2009. The 2018 average price was $4.54 lower than the previous year in 2017.


What went wrong in 2018? Looking at monthly prices for 2018 and 2017, the unrecoverable damage to hog prices was in the third quarter of 2018 when hog prices were about $12 lower than the same period in 2017. The most extreme month was September 2018 when prices were $20 lower than in September 2017. The collapse of hog prices in the third quarter of 2018 appears to be related to the U.S. trade policy. As the U.S. put tariffs on products we import, countries retaliated by putting tariffs on ag products they import from the U.S. Of particular concern for pork were Mexico and China, which together purchased 9% of U.S. production in 2017 as pork imports. As a result of these concerns, both futures and cash market prices collapsed. Ultimately, pork exports were not reduced as much as was feared (especially to Mexico), and market prices began to recover into the fall.


So where does this leave price expectations for 2019? Using current lean hog futures and a historical basis, live hog prices are expected to average near $49 in 2019. That is an increase of $3 per live hundredweight over last year’s $46.


Prices are expected to average in the low-to-mid $40s in the first quarter. Second- and third-quarter averages are expected in the low- to mid-$50s and then back down to the mid-$40s in the final quarter of 2019.


My estimated total costs of production...