July 24, 2003

 

Market Advisor: Hog Numbers Decline and Prices Increase

By Tim Petry, Livestock Marketing Economist
NDSU Extension Service

Hog prices have rebounded in 2003 from the cyclically low prices that were characteristic of the 2002 marketing year. The U.S. average price of hogs for the second quarter of 2003 was $42.64 per hundredweight compared to $35.03 during the same time period of 2003, a 22 percent increase.

Prices are being buoyed by reduced U.S. production, increased pork exports, and lower supplies of competing meats – especially beef and lamb.

Producers have reduced swine herd numbers in response to the cyclically low 2002 prices. The USDA-National Agricultural Statistics Service (NASS) Quarterly Hogs and Pigs report released June 27 indicated the inventory of all hogs and pigs in the United States was 58.7 million head, down 3 percent from a year ago. The breeding herd was estimated at 5.94 million head, 4 percent below the herd size in 2002 and 2001. The decline in numbers was consistent with industry expectations.

The number of market hogs was 2 percent smaller (down 1.3 million head) than the year before at 52.8 million head. The March through May pig crop totaled 25.1 million head which was about 3 percent smaller than last year, while the number of sows farrowing was down 4 percent. Sow productivity improved over last year with an average of 8.88 pigs per litter (up about 1 percent) compared to 8.82 pigs per litter in 2002.

The number of lightweight feeder pigs (60 pounds and lighter) was down 3 percent from last year while the number of heavy weight hogs (180 pounds and heavier) was slightly below a year ago. Middleweight feeder pigs (60 to 179 pounds) were down between 2 to 3 percent from 2002's level. These numbers suggest that the largest decline in slaughter hogs will be in the fourth quarter. The number of slaughter hogs this year could be 2 to 3 percent below a year ago in the third and fourth quarters respectively.

Hog prices are also being supported by continued strong exports. U.S. exporters shipped about 5 percent more pork to foreign markets so far in 2003 compared to a year earlier.

Japan is the leading market for U.S. pork exports, followed by Mexico and Canada. Japan typically accounts for about 50 percent of U.S. exports, with Mexico taking 20 percent and Canada about 10 percent.

Japan has imported about 9 percent more U.S. pork in 2003 than last year. The declining value of the U.S. dollar relative to currencies in Denmark and Canada, both major pork exporters, may be contributing to the increase.

Although relatively small, pork exports to South Korea, Taiwan, and Hong Kong have increased this year. Foreign market development efforts by U.S. pork producers have targeted Asian countries as good potential markets for U.S. pork products.

The USDA Economic Research Service is predicting hog prices to average near $40 per hundredweight for the remainder of the year. Weakness into the mid to upper $30-range in October and November is likely when peak seasonal slaughter levels occur.

Hog producers should be aware that USDA-NASS is discontinuing the publication of monthly Hogs and Pigs reports after August. Only quarterly reports will be issued in March, June, September, and December of each year. The last monthly reports will be released July 25 and Aug 29. The next quarterly report will be released Sept. 26.

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Source: Tim Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsu.nodak.edu