Hog breeding herd down, productivity up leads to continual financial hardship
Hog producers continue to deal with high input costs and little profit even as breeding herd numbers decline.
"Breeding herd numbers are declining; however, production is at an all-time high," said University of Missouri agricultural economist Ron Plain.
"The increase in productivity comes after a decrease of 2.7 percent in the breeding herd, which continues to be interesting as pork producers have been losing money for the past 18 to 20 months," he added.
Plain suggested a continual cutback in the breeding herd to get production back in the black ink.
All hog and pig numbers are 66.079 million head, which is 2 percent lower than a year ago; however, no considerable decline is seen in U.S.-born hogs.
"The total herd decrease came from the decline in feeder pigs being imported from Canada," said Bob Brown, an independent market analyst from Edmond, Okla.
"In the first five months of 2009, there was a decrease of 800,000 Canadian feeder pigs being imported to the U.S.," he said. "The U.S. herd for that time period showed just a slight decrease."
Slaughter hog imports from Canada are also down, thus leading to the total U.S. hog slaughter numbers to be just under a year ago's levels because of the decrease in imports.
However, total hog production is up 1 percent over a year ago because of record weights of slaughter hogs.
"With high feed costs, you would think the slaughter weights would go down instead of being the highest ever," said Brown.
While Plain said producers are making better management decisions by getting rid of the least productive hogs in their herds, they are also seeing an increase in productivity, which doesn't decrease total production.
"Producers are not doing a whole lot to reduce tonnage, which historically is the key to getting hog prices to rise," said Plain.
Plain expects prices in the $59 range on the Iowa/Minnesota basis for the third quarter of 2009, saying that higher prices may be seen.
For the fourth quarter of 2009, he expects prices in the $57 range. Higher prices are expected for 2010, with $64 for the first quarter and $68 for the second quarter.
"Better prices are expected for next year. Unfortunately, unless feed prices decrease, there is still no profit in those numbers," said Plain. "This is still a very tough financial situation for pork producers."
Jennifer Bremer can be reached by phone at 515-833-2120 or by e-mail at email@example.com.