The U.S. Breeding Herd Liquidation is well underway. The industry started losing money in September 2022 the relentless losses for the last 15 months can be seen in the decrease of 253,000 sows.
Most of the decrease in the USDA data has been in the last six months down 205,000 as financial losses compounded. In the last three months herd down 180,000 according to report which we expect is some catch up from losses not caught in prior quarter reports.
We expect as we see current losses in the $40 per head range the U.S. breeding herd continues to liquidate. At the rate of losses, it won’t be surprising to see a further 100,000 fewer sows by March 1. If correct the herd would be down 350,000 from September 1, 2022 (-6%).
Other Observations
Market Hog Inventory December 1 is at 100% of a year ago a reflection of litter size up 4% (11.64 vs. 11.18). Mostly attributable from what PRRS monitoring would indicate as less PRRS activity.
Pig Crop June – November at 100% of a year ago.
Sows farrowing June – November down 4% in line with smaller herd size. Sow herd as it continues to decline will lead to even further farrowing’s.
Smithfield Foods announced large liquidation of sows in there Missouri operations May of this year. Not sure of numbers but probably over 60,000 sows. USDA reports breeding herd Missouri December 2022, 440,000 – December 2023, 440,000. Identical?
States with Big Breeding Herd declines December to December.
Colorado -20,000
Illinois -20,000
Iowa -60,000
Nebraska -10,000
North Carolina -20,000
Oklahoma -100,000
Texas -30,000
Wyoming -16,000
States with Breeding Herd increase December to December
Minnesota +20,000
Pennsylvania +25,000
South Dakota +45,000
Sometimes you guess right. This past week The Long and Short of it with Jim Long from Genesus Genetics, December 20th, 2023, podcast on Swineweb we projected breeding herd would be under 6 million – got lucky 5,999 USDA reported.
The U.S. breeding herd is down 253,000, we expect Canada down about 50,000 and Mexico is roughly down 100,000 range. Add together 400,000 North America – with liquidation continuing 400 x 20 pigs = 8 million market hogs.
U.S. pork in cold storage November 30, 2023, 416,094 and 2022, 451,598 (-8%). Decline of about 35 million lbs. With U.S. industry at very low prices, it’s interesting storage levels are declining not increasing.
Last weeks U.S. Pork Exports were 40,500 metric tonnes the highest week this year. Net sales were 37,500 metric tonnes. U.S. Pork Exports to Mexico are at monthly record levels in October over 100,000 metric tonnes. With sow herd liquidation in Mexico cutting production further U.S. pork exports should continue at a high level.
Summary
Less sows, Bigger litters, less farrowing’s and same number of market hogs.
We expect hog prices will start moving higher in February – March relative to today’s futures as Pork continues at a huge discount to Beef with expectation in 2024 that there will be even less Beef than 2023.
U.S. pork exports should continue at a strong level in 2024. We expect the financial losses China has seen similar to the U.S. is leading to less hogs there. As the supply in China declines more exports from around the world will go there leading to less available in other markets supporting global and U.S. hog prices.
2023 was an unprecedented bad year for U.S. Pork Producers with 7 months over $30 per head losses an average head loss over $30 for the year. In the previous 20 years there were a total of three months over $30.00. As an overly optimistic person we believe 2024 will be much better than 2023. We still expect fewer hogs, strong beef prices and good pork exports to pull prices higher. We do suggest don’t bet the farm on our thoughts.
