Pork producers could see profitable 2020
The Telegraph (MO)
January 6, 2020
MACOMB — The USDA’s December Hogs and Pigs report indicates producers continue to expand.
The Dec. 1 inventory of all hogs and pigs came in at 77.338 million head, a record for this quarter and up 3% from a year ago, according to Jason Franken, agricultural economist at Western Illinois University.
“The U.S. hog industry has been expanding since mid-2014, with the annual breeding herd growth rate peaking around 3.5% in early 2018,” Franken says. “Unprofitable margins and uncertainties from trade tariffs have slowed breeding herd expansion, as the USDA’s December report has the breeding and market herds, respectively, up 2% and 3% from this time last year. These numbers are fairly in line with pre-report expectations.”
The number of pigs weighing less than 180 pounds was 2.25% larger than the inventory at this time a year ago. These are the market hogs arriving at processing plants from January to May 2020, Franken explains.
“The change reflects that the September-November pig crop was up 2% from 2018, despite 1% fewer sows farrowed during the period,” Franken said. “The 2% larger fall pig crop also implies roughly 2% more slaughter next spring.”
The larger pig crop is due to a record high of 11.09 pigs saved per litter, on average, or a little better than one pig per litter more than last year’s 10.76 for the September-November period. The 2019 average was 10.97 pigs per litter compared to 10.68 in 2018, continuing the upward trend with an average rate of annual increase of 1.3% over the last decade.
The upward trend in pigs per litter, combined with reported farrowing intentions, suggests more hogs going to market in 2020, Franken said. Winter farrowing intentions are up 1% from actual farrowings last year and up 5% from two years ago. Spring farrowing intentions are also up slightly from last year and up 3% from 2 years ago.
“All of these numbers point to a somewhat higher supply of hogs and pork in 2020,” he said. “With higher production, one might expect lower prices, but there are additional items to consider on the demand side.”
Domestically, U.S. per capita pork consumption was under 50 pounds per year from 2010 through 2015, just surpassing 50 pounds in 2016 through 2018, and estimated at 52.7 pounds in 2019; the highest it has been since 54.2 pounds in 1981.
Consumption is expected to decline by just 0.1 pound per American, Franken said. On the world market, all eyes are on Asia and China in particular, due to their production losses from African Swine Fever.
Although held back by China’s retaliatory duties, U.S. pork exports to China increased throughout 2019. In September and October, China surpassed Japan to become the United States’ second-largest foreign customer after Mexico. The U.S. House of Representatives passed the U.S.-Mexico-Canada Agreement in December, and the Senate is expected to ratify it this year, which will help to ensure long-term duty-free access to this key market.
The USDA is forecasting U.S. pork exports in the first three quarters of 2020 to be, respectively, 21%, 7.5%, and 8.8% greater than...