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Uncategorized

Is the US pig supply as tight as reported?

PW ReportersBy PW ReportersOctober 1, 20133 Mins Read
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The supply of finished pig in the US has been reportedly tighter in recent weeks, but is this actually the case?

According to economist Chris Hurt of Illinois’ Purdue University, one common explanation that’s going around is that losses from the porcine epidemic diahorrea virus has reduced the herd much more than had previously been thought, but could the perceived low slaughter numbers actually be the result of the way the industry produces its figures?

Slaughter statistics are measured by comparing this year’s slaughter to the slaughter for the same period one year ago, he said. When numbers viewed in this manner appear unusual, it can be because of aberrations this year, but also due to aberrations in the numbers a year ago. What’s being viewed as a very low slaughter level this year, may actually be due to an aberration in the slaughter numbers a year ago.

In fact, he added, what we’re actuall seeing is an effect of the unusually high slaughter in the late-summer of 2012 that was being driven by drought conditios in many US states.

Mr Hurt said the drought rapidly pushed corn and meal prices to peaks in August and September of 2012. Record high feed prices and large anticipated losses provided a grave outlook for the industry and some producers began to adjust, killing sows to reduce herd size, exiting the industry altogether, or advancing shipments of finished pigs to reduce losses on every kg of meat being produced.

Marketing weights prior to the drought had been running nearly 2% higher, he added. Those began dropping in August, eventually reaching about 2% lower by the autumn of 2012. Overall, slaughter numbers were more than 5% higher from mid-August through September of 2012.

Figures for mid-August through the end of September 2013 show that slaughter numbers have been down on aggregate by more than five percent. While thios may look like a significant fall, it’s really just a return to the normal situation for the time of year.

Producers have benefited, however, with cash prices for pigs sharply higher on the year. Prices are currently about 82p/kg liveweight compared to 67p/kg liveweight 12 months ago.

Looking ahead, USDA statistics suggest slaughter rates i October 2013 will be unchanged from the same month in 2012, while they will be about 1% higher November and December. For 2014, slaughter numbers should be up about 1% in the first quarter, and then move 2-3% higher in the spring and summer. Finishing weights should be higher as well.

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