close [X]

Few Surprises in Quarterly Hogs Report: U.S. has Plenty of Pork

Market Intel / April 2, 2019

Credit: Martin Abegglen / CC BY-SA 

On March 28, USDA’s National Agricultural Statistics Service released its Quarterly Hogs and Pigs report, providing a detailed inventory of breeding and marketing hogs.

Producers use this data to determine production and marketing strategies, while the industry uses it to assess the markets and the future supply of product.

The U.S. inventory of all hogs and pigs on March 1 came in at 74.296 million head, up 2.1 percent from the previous year. This came in right in line with analysts’ expectations of a 2 percent increase from March 1, 2018. In this most recent report, USDA pegged the market hog inventory at 67.95 million, up 2.1 percent from last year but down slightly from last quarter and in line with market expectations of a 2 percent increase. The number of pigs kept back for breeding came in slightly above analysts’ expectations of 1.9 percent, with USDA reporting 6.35 million head, up 2.2 percent from 2018.

With analysts’ expectations largely in line with USDA’s numbers, this report is very much neutral in tone. It also continued the storyline of record amounts of pork, and even more pork coming down the pipeline with total hogs and pigs, the breeding herd and the market herd all making records for the March report.

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 and 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. The current trade situation has kept feed input costs low, relieving some of the pressure caused by lower pork prices, also a result of the trade issues.  

As far as the future supply of pigs, the report shows producers intend to increase farrowings from this time last year. The report showed producers intend to have 3.12 million sows farrow in the March-May quarter, resulting in an increase of 1 percent from actual farrowings in 2018 if those numbers are realized. One discrepancy between the report and analysts’ expectations is in the farrowing intentions reported for June-August this year. The report shows intentions down slightly from 2018 at 3.19 million sows, while analysts were expecting an increase of over 2 percent from 2018. Analysts are somewhat split on whether or not the rate of expansion is changing, with some considering the potential  for a slowdown in light of a tough financial environment for producers. However, many analysts do not see a slowdown in the rate of expansion moving forward. One major  wild card is leaving many analysts without a solid prediction: How  will the African Swine Fever outbreak in China ultimately affect the U.S. and global pork markets? 

Iowa is once again top in the nation for pork production, accounting for 32 percent of the nation’s hogs and pigs in inventory. As usual, following Iowa are North Carolina and Minnesota, accounting for 8.9 million and 8.7 million pigs each, respectively. Together, these three states account for 55 percent of the nation’s hog supply. 

Contact:
Michael Nepveux
Economist
(202)406-3623
michaeln@fb.org
 

Share This Article

Credit: Mauricio Lima / CC BY 2.0  

According to USDA’s “A Case for Rural Broadband,” if access to broadband and adoption of digital agricultural technologies matched producer demand, U.S. agriculture would realize benefits amounting to nearly 18% of total U.S. market production, or $64.5 billion annually, based on 2017 levels. The report, published by the American Broadband Initiative, analyzes the possible economic benefits of bringing e-connectivity to the heartland and, more importantly, what needs to be done to make it happen.

Full Article
Credit: U.S. National Oceanic and Atmospheric Administration / CC0 

In response to U.S. tariffs on imported solar panels, washing machines, steel and aluminum, as well as additional products from China, e.g., Tariff Revenues Up Sharply, many of our largest trading partners responded by retaliating on U.S. agriculture products including but not limited to tobacco, soybeans, dairy products, feed grains, pork, fruits and tree nuts. These retaliatory actions included the cancellation of supply contracts, higher tariffs and other non-tariff barriers. Many U.S. farmers lost access to foreign markets, resulting in increased inventories of some U.S.-produced commodities in 2018.

Full Article