The USDA released there September 1 quarterly Hogs and Pigs Report last Thursday.
If lean hog futures are any indication of market reaction of the USDA report, you need to only look at lean hog futures last Friday with October to February falling over $3.
Less sows, more market hogs. The 268,000 more market hogs would be about 10,000 more market hogs a week over the next six months or 2,000 a day.
Litter size took a big jump in the report June – August this year 11.61, last year same time 11.13 (+4%). In our opinion the litter size increase and more market hogs can be mostly attributable to lower PRRS incidence in the U.S. sow herd and wean to finish. According to the data from the U.S. Swine Reporting System. We quote from September Report, “Since 2003 PRRS virus achieves the historically lowest submission in the wean to market category in July and August. In sow farms the current percentage of positive admissions (16.28%) is the lowest since October 2017 (13.53%). The detection is also the lowest (16.56%) since October 2014 (6.13%) in the overall category.”
Good news less PRRS. The challenge is from the historical data PRRS usually jumps seasonally in October through April.
The USDA reports the sow herd down 1% but farrowing intentions September – November down 5%. 1% less sows but 5% less farrowings?
In June – August quarter this year USDA has actual farrowings 2,949,000 compared to 3,092,000 down 4%. The 4% decline was from according to USDA report the same number of sows as the year before June 1, 2023 – 6,146 sows, 2022 – 6,168 sows.
To us it doesn’t add up. Why would farrowings be down 4-5% when sow herd the same or -1%? We don’t believe producers are keeping sows and not breeding them. One of these numbers are wrong? Is the sow herd down more than 1%? Why would litter size go up but farrowing rate go down?
September Report indicates Illinois increased its breeding herd from 590,000 to 670,000 (+80,000) in the last year (+14%). At the same time Iowa decreased from 930,000 to 880,000 (-50,000) or -5%. It would be nice if we could get feedback from Illinois readers where they think an extra 80,000 sows got put in the last year?
Summary
USDA reports a few less sows. Same number of market hogs. Bigger litters. Less Farrowings. Less PRRS. We believe the fewer farrowings actual last quarter and projected this quarter probably indicates the breeding herd is smaller than being reported. We expect continual liquidation of breeding herd as current projections over the next six months indicate further losses farrow to finish.
Being positive by nature we continue to see ongoing lower levels of Red Meat and Poultry production. Pork Exports continue to run 8% higher year over year. Less total supply will be price supportive, and we expect lean hog futures to be better than lean hog futures currently project. Feed costs also will be lower. Last Friday U.S. National Corn price $4.49 a bushel. The lowest price since January 2021. It’s been a continuous tough go. Not a industry for faint hearted.
