Disciplined Expansion Leads to Record Setting U.S. Hog Inventory, Following PEDv OutbreakFri, 25 Sep 2015 16:51:21 CDT
The U.S. pork industry has recovered from the devastating Porcine Epidemic Diarrhea Virus (PEDv). On Friday, the U.S. Department of Agriculture reported record hog and pig inventory in the U.S. with 68.4 million head as of September first. That was up four percent from September 1, 2014, and up two percent from June 1, 2015. This is the highest inventory of all hogs and pigs since quarterly United States estimates began in 1988. This was a very strong expansion for the U.S. hog industry. Purdue University Professor of Agricultural Economics Dr. Chris Hurt called this growth "disciplined expansion". Because of the PEDv virus, hog prices surged to record levels, but he felt the industry was disciplined in its expansion.
"I think it goes back to fact that industry participants knew it was kind of an outlier last year, that profitability, and they just were not willing to expand too much," Hurt said. "So, what I think I see as we go forward, is an industry that has expanded about as much as it can without getting into losses."
The U.S. breeding hog inventory totaled 5.99 million head, was up one percent from last year, and up one percent from the previous quarter.
The market hog inventory came in at 62.4 million head. That was up four percent from last year, and up two percent from last quarter. This is the highest market hog inventory since quarterly United States estimates began in 1988.
The U.S. continues to show productivity gains with the June-August 2015 pig crop totaled 30.6 million head. That was up one percent from 2014. Sows farrowing during this period totaled 2.94 million head, down two percent from 2014. The sows farrowed during this quarter represented 50 percent of the breeding herd. The average pigs saved per litter was a record high 10.39 for the June-August period, compared to 10.16 last year. Pigs saved per litter by size of operation ranged from 8.00 for operations with 1-99 hogs and pigs to 10.40 for operations with more than 5,000 hogs and pigs.
In evaluating this USDA report, Hisgrain Commodities Senior Analyst Victor Aideyan said some of these numbers do highlight the fact that, the U.S. hog industry has continued to increase its productivity and has to a large degree, seemed to overcome the PEDv effects that we had last year.
"It's actually good for the industry, as it was able to handle a very difficult health issue last year," Aideyan said.
In looking at the outlook, Hurt said the hog industry has reached a rare point, where supply and demand are reasonably in equilibrium at a price level that allows all costs to be covered. In looking at prices, Hurt forecasts 2016 corn prices to be about 25 cents a bushel higher than 2015. With larger soybean supplies, he predicts soybean meal prices will be lower in 2016 than this year. With a little increase for the cost for corn and lower cost for soybean meal, he said this keeps feed costs at the lowest level for hog production since 2007.
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For the full USDA-NASS Quarterly Hogs and Pigs Report, Click Here.
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