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USDA Quarterly Hogs and Pigs Report Released

By USDA News

The data published in the quarterly Hogs and Pigs report, released by USDA on December 23, indicates that the production effects of Porcine Epidemic Diarrhea (PEDv) are abating and that the U.S. hog industry is likely expanding. Year-overyear increases of the December 1 market hog inventory and of the autumn litter rate suggest that aggressive actions by producers, including increased biosecurity measures and vaccination, has contributed to lowering the disease incidence and limiting losses of newborn pigs from PEDv.

The December 1 inventory of market hogs increased 2 percent from a year earlier, marking the first year-over-year increase in quarterly market hog numbers since March 2013.

The September–November 2014 litter rate—10.23 pigs per litter—was the first year-over-year increase since 2013.

The December report also provided information that points to industry expansion and to strong production increases in 2015. The report showed an increase in the inventory of breeding animals, a second year-over-year increase in as many quarters. After a 2 percent increase in the September breeding herd, the report indicated a 4-percent increase on December 1. Increases in breeding animal inventories can indicate that the industry is expanding capacity to increase hog production. The December report also showed a robust set of first-half 2015 farrowing intentions, another indication that production is likely to increase in 2015. Producers stated intentions to increase first-half 2015 farrowings by 4 percent. All of these factors—larger inventories of market animals, recovering litter rates, an expanding breeding herd, and strong producer farrowing intentions—point to increased pork production in 2015 and lower hog prices. USDA expects that 2015 pork production will be 23.9 billion pounds, an increase of 4.6 percent over 2014. Expected 2015 pork production would be 2.8 percent higher than production in 2012, the most recent production year not affected by PEDv.

Hog prices are expected to decline in 2015 in response to larger available supplies of market hogs. First-quarter 2015 prices of 51-52 percent lean hogs are expected to average $62-$64 per cwt; in the second, quarter prices are expected to be $64- $68 per cwt; and in the third quarter, $62-$68 per cwt. For 2015, average hog prices are expected to be $60-$65.

Pork Exports Down Sharply in November
U.S. pork exports in November were 364 million pounds, a volume almost 20 percent lower than a year ago. Shipments to most major destinations were lower. It is possible that still-elevated pork prices made U.S. product less attractive to foreign
buyers in November. It is also possible that foreign ‘overbuying’ of U.S. pork early in 2014 in anticipation of PEDv reduced availability later in 2014, reducing demand for U.S. pork in November. Another likely explanatory factor is the high-valued U.S. dollar. The figure below shows the extent of the 2014 U.S. broad dollar index premium to 2013 index values. A strong-valued U.S. dollar generally makes U.S.

products more expensive—and thus less competitive—abroad. By the same token, a strong U.S. dollar exchange rate makes foreign products more competitive in the United States: U.S. imports of pork in November were about 10 percent above imports a year ago. Most of the increase in November imports was of Canadian and European origin.

The United States is expected to export 5.250 billion pounds of pork in 2015, 8.4 percent more than in 2014. U.S. pork imports are expected to be 910 million pounds, almost 10 percent below imports in 2014, when PEDv reduced supplies of domestically produced pork.

Source: USDA


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