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U.S. hog inventory drops, better prices expectedThe outlook for pork producers is better than expected, according to University of Missouri Extension marketing specialist Glenn Grimes. "Hog numbers are down, which should help boost prices," he said. "The breeding herd numbers are down, but we need a 10 percent reduction in order to get producers out of the red ink." Grimes expects pork producers to be challenged economically through May 2010, when he expects the markets to be better if the reductions continue to be made. The third quarter U.S. Department of Agriculture Hogs and Pigs report shows a decrease in all hogs of 2.3 percent from a year ago, with a total of 66.6 million head in the U.S. herd. The breeding herd is down 3.1 percent from a year ago and the market herd is down 2.2 percent from a year ago. Slaughter numbers for last week under Federal Inspection was estimated at 2,346 thousand head, no change from a year earlier. Grimes said fourth quarter slaughter is expected to be down 1.9 percent from the previous year, pushing prices to $45 per hundredweight (cwt). He expects a 3.7 percent decrease in slaughter for the first quarter of 2010, pushing prices to $48 per cwt. "Reduction has been made, but pork producers still have a long way to go," he added. Joe Kerns, director of purchasing for Iowa Select Farms, said there is a glimmer of hope and optimism for pork producers with the decrease in the U.S. pork herd. "The take away is that we are trying to find a bottom," he said. "Pork producers have so many factors to consider with their cost of production. We are optimistic that the bottom is near." The June-August 2009 pig crop, at 28.8 million head, was down 2 percent from 2008. The average pigs saved per litter hit a record high 9.7 for the June-August 2009 period compared to 9.5 last year. However, there has been a 34 percent decline in the number of feeder pigs coming into the United States on a weekly basis from Canada, according to Daniel Bluntzer, director of research with Frontier Risk Management in Corpus Christi, Texas. "Slaughter is down 60,000 head per week. That makes a huge difference to inventories and numbers," said Bluntzer. "We know something needs done to get supply in line with demand. It just takes some time to get there." U.S. hog producers intend to have 2.94 million sows farrow during the September-November 2009 quarter, down 3 percent from the actual farrowings during the same period in 2008, and down 8 percent from 2007. Intended farrowings for December 2009-February 2010, at 2.93 million sows, are down 3 percent from 2009 and down 5 percent from 2008. Bluntzer said these farrowing numbers may be a bit high as to what the real numbers will be. Lower farrowings means higher prices for producers in the long run. On a global scale, the effect of a weaker U.S. dollar is starting to gain traction in the export market, which bodes well for the pork industry, Bluntzer said. "Exports have seen a big recovery and are a bright spot as we head into the end of the year and into 2010," he said. Grimes thinks trading partners may continue to use H1N1 as an excuse for not purchasing pork products; yet, Kerns said H1N1 is slowly separating from causing problems with demand, especially since continued education is being done to ensure the safety of U.S. pork. Jennifer Bremer can be reached by phone at 515-833-2120, or by e-mail at jbremer@hpj.com.
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