Hold tight – 2015 will be a rollercoaster!
The front page of the December issue of Whole Hog presents the key data from the USDA’s quarterly hog census (released 23 December). These numbers suggest that the global pig industry faces a boom and bust scenario in 2015. The impact of PEDv has created ideal conditions for supply shortages/price increases/production hikes in North America but the impact of this will be felt for years to come in Europe – and the rest of the world.
The chart shows that US hog price have receded from their peak – it’s been a rollercoaster. PEDv has also receded but no-one can be quite sure if it is gone for
good but we can assume that the worst is over in the USA. US hog farmers’ margins have been at record levels for most of 2014 and, as feed prices have fallen back under the weight of good harvests almost everywhere, the expectation was/is that US farmers would expand their breeding herd. The first census data to show evidence of this was the USDA report for 1 September 2014. In that report (which covered the previous 3 months) total hog numbers dropped by 2.7% year on year. The breeding herd, however, grew by 1.8% compared with September 2013 whilst slaughter hog numbers were down 3% from last year. In the September census US farmers claimed they would have 4% more sows farrowing during the September-November 2014 quarter and that they would increase farrowings by the same percentage in the December 2014-February 2015 period. The 1 December report shows that this is broadly what has happened since the December census indicates that 2.87 million sows farrowed during this period: that’s up 3% from 2013 – not quite the 4% that the previous September census forecast but still a big increase. The inventory of all hogs and pigs was reported to be 66.1 million head – an increase of 2% from the previous year and market hogs, at 60.1 million head, were up 1.8%. Notably, the average number of pigs saved per litter was a record high 10.23 for the September-November period, compared to 10.16 last year i.e. more farrowings and more pigs per litter in the USA.
The December census also states that US hog farmers claim that they will farrow 2.87 million sows during the December-February 2015 quarter, up 4% from the actual farrowings during the same period in 2014, and up 3% from 2013. Intended farrowings for March-May 2015 are forecast to be 2.90 million sows. That’s an increase of 3% from 2014, and up 3% from 2013. That’s a lot more pigs in the pipeline in 2015. Unless supply is constrained elsewhere or demand shifts to the right there will be downward pressure on pig prices in the next 12 months. After record highs for hog prices in 2014 it could be see record lows in 2015/16? Those of us with long price series and grey hair have been here before…… don’t go long on pork bellies just yet.