SOW SLAUGHTER UP: PORK OUTPUT WILL DROP IN ‘13
In response to increasing corn and soybean prices and declining producer profitability this year, the hog industry is slowly contracting as evidenced the recent upswing in weekly sow slaughter. The larger number of cull sows over the last month pushed year-to-date slaughter levels to about 1% less than a year ago, when it was down over 2% in the first half 2012.
As of week-ending August 11th, year-to-date Federally Inspected (FI) sow slaughter as reported by USDA-NASS totaled 1.79 million head. Since early July, weekly slaughter levels have averaged over 6% (or about 18,000 sows) above a year ago. By the end of July, sow slaughter was above 60,000 head per week and have remained so since. For week-ending August 4th, weekly slaughter was 13% higher than the corresponding week in 2011 and the largest of any week since mid-December of last year.
As a result of recent sow slaughter levels, the September 1 USDA’s Quarterly Hogs and Pigs report (to be released September 28th) is expected to show a smaller breeding herd relative to the prior quarter. That trend is forecast to persist well into 2013.
Note the U.S. sow slaughter numbers include imports from Canada, the hog industry is suffering there as well. Breeding herd liquidation in Canada has picked-up in recent weeks as indicated by industry reports and by year-over-year increases in the number of sows sent to the U.S. for slaughter. The recent trends suggest fewer Canadian feeder pigs may be sold to U.S. growing operations.
Increased sow slaughter this year will be reflected in a smaller supply of slaughter hogs in the second half of 2013. Sow performance (i.e. pigs per litter) should remain high as producers mostly cull lower performing animals. Still, U.S. quarterly hog slaughter is forecast to post significant year-on-year declines in the third quarter of 2013. Slaughter hog weights likely also will be reduced by record high feedstuff costs in much of 2013. So, U.S. pork production in the third quarter of 2013 will be the smallest for that quarter in five years. U.S. pork output could post year-on-year declines into early 2014.
Source: Livestock Marketing Information Center (www.lmic.info)
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