MU ag economist says that fewer pigs next year should help producers’ profitability

COLUMBIA, Mo.—The USDA released its Quarterly Hogs and Pigs Report, which showed that the swine herd is shrinking as hog producers cut back in the face of record feed prices. According to the report, the breeding herd was down 0.3 percent in the third quarter; farrowing is forecast to be down 2.7 percent this fall and 1.5 percent lower this winter.

University of Missouri Extension agricultural economist Ron Plain says that fewer sows should lead to fewer pigs and much-needed higher prices for producers next year.

“Our estimates are that losses for the fourth quarter of this year will average close to $50 per head, and it won’t be much better the first quarter of next year,” Plain said. “From a producer’s standpoint, fewer hogs going to slaughter and the possibility of a good corn crop lowering feed costs could lead to a profitable situation in the second half of 2013.”

In the shorter term, there is positive news, Plain says. The market hog inventory has increased less than was expected and the industry has pulled ahead on slaughter.

“With the high feed costs, producers are sending hogs to town sooner to put a stop to those high feed bills,” he said. “That may create a hole in marketings. Rather than seeing prices continue to decline into December as they normally do, we may see more of a sideways move from here to the end of the year.”

Plain also says that pork prices in the grocery store will be attractive for consumers for the remainder of this year as current production numbers are still strong and a reduction of pork supplies won’t be seen until 2013.

“Pork chops and ham prices this fall will probably be lower than a year ago,” Plain said. “And certainly compared to current beef prices, pork is going to be a fairly good bargain.”

The report also showed an increase in productivity in the hog industry. The quarter also saw a 1 percent increase in pigs per litter, a statistic that Plain says has been increasing for several quarters.

“Pigs per sow per year keep going up and weights have been up most of the year,” he said. “So the continuing productivity on hog farms is good news for consumers as it means that over time pork prices are likely to rise slower than the overall cost of living.”

There were expectations of expansion within the hog industry in 2012 but circumstances dictated not only a lack of expansion but also the shrinking of the swine herd.

“We planted more acres of corn this spring than any year since 1937 and were counting on a bumper crop, lower feed costs and plans to expand the hog industry,” Plain said. “Hot, dry weather changed that quickly. We saw record feed costs rather than declining feed costs, so the swine industry was forced to cut back. Hopefully, next summer will be cooler and wetter, we’ll produce a lot of feed grain, and the cost of raising livestock will go down. If that occurs we will probably see the swine industry expand the breeding herd and produce more hogs for 2014.”