As we approach USDA’s next quarterly Hogs and Pigs report set to be released on Sept. 26, we are having a difficult time finding positive news in the supply fundamentals, which will keep pressure on demand to remain strong.
Total hog slaughter during the June-August period ran about 1.1% larger than a year earlier, however, last year there was one more slaughter day during the quarter. Adjusted for that, this year’s quarterly slaughter was about 2.7% larger than last year’s and was larger than expected. USDA’s June inventory report pegged the June 1 market hog inventory at 101.7% a year earlier, with supplies of hogs weighing 120 pounds at about 102.2%. This suggests that either USDA undercounted the market hog inventory or producers have been pulling hogs forward and we will see some type of “marketing hole” in coming weeks. However, with hog weights running above last year throughout the June-August quarter, that second scenario seems unlikely. We would also note USDA has consistently undercounted the hog inventory over the past couple of years, leading to a string of upward revisions in its estimates.
Hog weights have been falling seasonally since early June but have been running above last year since mid-May, pushing pork production well above last year. Federally inspected live hog slaughter weights during June-August averaged about 3.1 pounds or 1.1% above a year earlier. Slaughter weights should be at or near a seasonal low as hogs are about to start feasting on supplies of new-crop corn. In 2023, the average live hog weight hit its yearly low during the week ended Sept. 2 and rose 5.4% by year end. With abundant supplies of low-priced corn again available, a similar scenario is likely this year.
Gains in breeding efficiency should ensure a large pig crop, even if June-August farrowing’s match the farrowing intentions USDA reported in its June inventory report at only 97.5% of a year earlier. A moderate gain of 2.0% in the number of pigs per litter would put the June-August pig crop at about 99.4% of last year. However, we suspect actual June-August farrowing’s exceeded producer intentions as happened in March-May. We would not be surprised to see the June-August pig crop steady to marginally larger than last year.
Meanwhile, recent sow slaughter numbers suggest liquidation of the breeding herd has slowed or stopped, with hog producers enjoying a string of profitable months this summer. Sow slaughter has run below a year earlier for 14 straight weeks. June-August sow slaughter was down about 8.5% from last year and sow slaughter for the 4 weeks ended Aug. 31 was down about 10.4%. Sows also made up a lower percentage of total slaughter during June-August at 2.5%.
