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Will swine breeding herd increases continue?
Pig crop numbers and estimates of farrowing intentions, surveyed, compiled, and published by USDA’s National Agricultural Statistics Service, are widely used for forecasting future hog slaughter. The most recent pig crop, along with the two lightest weight market hog inventories, provide indications of slaughter roughly three to six months ahead. The pig crop aligns with hog slaughter approximately six months later.
The pig crop is not as accurate of a measure to predict slaughter as the market hog inventory due to production issues. Furthermore, the actual time to slaughter may vary because of differences in marketing weights for hogs or changes in feed efficiency and average daily rates of gain.
Farrowing intention estimates are used as an indication of slaughter from six to 12 months in the future. The first farrowing intentions estimate is made three months before farrowing begins and nine months before slaughter begins. The second farrowing intention estimate is made in the month farrowing begins and six months before slaughter begins. The initial or first estimate is more of a guesstimate and the second estimate is more of a plan.
Producers can change plans after reports
The survey for the December Hogs and Pigs report asked, how many sows and gilts for breeding were owned by this operation on Dec. 1, 2022? (Include unweaned gilts intended for breeding.). How many of these sows and gilts are expected to farrow during December, January, or February? How many of these sows and gilts are expected to farrow during March, April, or May? Typically, it is expected about half of the sows and gilts on a farrowing operation will farrow each quarter to keep a steady flow of pigs being born.
In September 2022, US hog producers intended to farrow 2.973 million sows during the September-November 2022 quarter, which would have been down 2.5% from actual sows farrowing during the same period one year earlier. Intended sows farrowing for December 2022-February 2023, at 2.902 million sows, would have been down 0.6% from the same period one year earlier.
In December 2022, actual sows farrowing during September-November 2022 were reported at 3.004 million head, down 1.5% from 2021 but 31,000 litters larger than the September through November expectations in the September report (Figure 1). US hog producers intended to have 2.947 million sows farrow during the December 2022-February 2023 quarter, which would be up 1.0% from the actual sows farrowing during the same period one year earlier and 45,000 litters larger than the December through February expectations in the September report. Intended sows farrowing for March-May 2023, at 2.981 million sows, would be up 0.5% from the same period one year earlier.
Pig crop estimates are based on reported actual sows farrowing while estimates of farrowing intentions are based on future plans of producers. These plans may change after USDA surveys are taken because of changes in actual or expected prices for hogs, changes in costs or expected costs and as a response to the current industry-wide hog production plans revealed by the survey. This is particularly true for first estimates of farrowing intentions. One purpose of the estimates of farrowing intentions is to provide information on current production plans so individual producers can make adjustments if they choose.
Breeding herd is increasing
The US breeding herd inventory on Dec. 1, 2022 was 6.154 million head. This was up 0.5% from Dec. 1, 2021 (Table 1). This was the first year-over-year increase in the national swine breeding herd in 2.5 years. Breeding herd utilization, September-November sows farrowing divided by the Sept. 1 breeding herd, at 48.3% is close to what it has been for this quarter over the last three years but one percentage point lower than the 20-year average.
Anticipated breeding herd utilization for the next quarter, December-February farrowing intentions divided by the Dec. 1 breeding herd, is 47.9% which would be higher than the last two years for the same quarter and almost right at the 20-year average (Figure 2). This helps provide some confidence in the breeding herd and farrowing intention estimates. When production is declining and hog prices are profitable or there are expectations of profit, hog producers are likely to retain a larger number of gilts for replacement purposes and make maximum use of their present sow herd.
The Minnesota breeding herd inventory was down 10.9% from a year ago. At 490,000 head, this is the second smallest Dec. 1 Minnesota breeding herd in the history of the data. The data series goes back to 1963. On Dec. 1, 1975, the Minnesota breeding herd was 465,000 head. The Nebraska breeding herd was down 7.0%, and the smallest Dec. 1 breeding herd since 2014. On the flip side, a few states saw notable growth. The Illinois breeding herd was up 11.9% compared to Dec. 1, 2021. Illinois has its largest Dec. 1 breeding herd since 1993. The South Dakota breeding herd inventory was up 9.4% year-over-year while the Oklahoma breeding herd inventory was up 6.5%. The Iowa breeding herd was up 1.1%.
As expected, with increases in the breeding herd, tend to come increases in farrowing intentions. From the first intentions estimate made in September for the December 2022-February 2023 quarter to the second intentions estimate made in December, Illinois producers added 35,000 litters expected and Iowa producers added 15,000 litters. Minnesota producers reduced December 2022-February 2023 farrowing intentions by 5,000 litters.
A possibility exists that farrowing numbers may end up being higher. Where could December through February sows farrowing be larger? In Illinois, the ratio of sows farrowing in December-February to the Dec. 1 breeding herd would drop to 43.2%, compared to 44.1% last year and a 20-year average of 49.2%.
Similarly, the Oklahoma farrowing-to-breeding herd ratio would be 39.8% for the coming quarter, which would be 2.6 percentage points below last year, and below the 20-year average of 45.6%. While the South Dakota ratio of 48.3% would be the same as last year, this would be below the 20-year average of 50.8%.
The potential declines in the farrowing rate could be aberrations, or more sows could, in fact, be farrowed than previously estimated. Of course, this assumes no revisions to breeding herd estimates.
Give credit where credit is due
The last two USDA Hogs and Pigs reports have been remarkably accurate. Over the 17 weeks stretching from the beginning of June to late September, when the September Hogs and Pigs report was released, hog slaughter was down 0.92% from the same period the year prior. The June Hogs and Pigs report indicated hog slaughter would be down 0.70%. From the beginning of September to the week ending December 10, 2022 hog slaughter was down 1.48% from the same period last year. The September Hogs and Pigs report indicated slaughter would be down 1.41%.
In the short run, the number of hogs and pigs are on the ground is what matters. Current and pipeline supplies along with the demand situation, determine prices. The Dec. 1, 2022 market hog inventory, at 66.966 million head, was down 2.0% from last year. The 180-pound-and-over category was down 1.9% and will be slaughtered in the next 30 to 45 days and by the time a quarterly hogs and pigs report is released, a good portion of these hogs have already come to market. Hog slaughter during the first three weeks of December was down 1.8% compared to the same three weeks in 2021.
Pigs weighing 120 to 179 pounds were down 1.9% and will be market ready in approximately 60 days. Pigs weighing 50 to 119 pounds were 2.0% below last year and will reach market weight in about 100 days and pigs weighing less than 50 pounds were also down 2.0% and will be slaughtered in 120 to 180 days.
Weather woes and Holiday scheduling impact slaughter
The years when Christmas and New Year’s Day fall on a weekend, throw a dynamic into slaughter planning. Adjusting operations for the two-week period introduces more variability within each plant and across the industry. In addition, heavy snow and blizzard conditions smashed into the Great Plains and Midwest beginning on late Dec. 19 and stretching into early Dec. 24. This storm upended hog slaughter for the week ending Dec. 24, 2022. Hog slaughter was down 7.4% compared to the same week the previous year. Slaughter numbers ramped up the following week but then declined notably year-over-year for the week ending Jan. 7, 2023. Saturday slaughter allows packers to somewhat make-up for holidays and weather challenges. For instance, Saturday, Jan. 7, 2023 hog slaughter was the third largest Saturday slaughter on record. The data goes back to 1993.
Commercial slaughter and price forecasts
Table 2 contains the Iowa State University price forecasts for the next four quarters. Prices are for the Iowa-Minnesota producer sold weighted average carcass base price for all purchase types. Basis forecasts along with lean hog futures prices are used to make cash price projections. The table also contains the projected year-over-year changes in commercial hog slaughter.
Lee Schulz, extension livestock specialist, 515-294-3356, firstname.lastname@example.org