Numbers don’t lie, and one USDA analyst says the numbers tell him that there’s not much incentive for hog producers to boost production.
“The signals that we’re getting from producers are that they are not funding the expanding production,” says USDA Livestock Analyst Shayle Shagam. We could even see declines in production as the months and the year goes on.
Shagam is gleaning this information from the latest quarterly USDA Hogs and Pigs report. The report shows a pretty big drop in farrowings during this past March through May quarter and Shagam says producers have told USDA they intend to cut farrowings even more in this current summer quarter and again in the fall quarter.
“Producers indicated intentions to farrow about 2.9 million head of hogs during June-August, which would be about 4% below a year ago. Their intentions for the September-November period would be to farrow about just under 3 million head of hogs, which would be about 4.5% below a year ago.”
Shagam adds that an increase in pigs per litter would probably not be enough to offset those kinds of cuts in farrowings. Shagam says from an economic standpoint, there is really not much incentive for producers to boost production. In fact, quite the opposite.
“If we were to look at estimated returns for average size farrow finish operators in Iowa for example, our returns have been negative for the most part so far for the year. And I think that is reflected in the fact that we are seeing these low farrowing numbers and we are seeing these low intention numbers.”
And, of course, low hog price numbers.
“Prices for hogs at the national base lean price, which is what we use here at USDA for a benchmark, at the time the survey was taken were running about $58-$59 a hundredweight compared to prices of about $70 for the same period of time in 2022. So again, there is a very bearish tint to what producers were seeing at that time.”
Shagam says even with some improvement coming in the last week or so, hog prices are still averaging about $10 a hundredweight below this time last year.
Source: USDA Radio
