For many years, following the release of the quarterly USDA hogs and pigs report I write a commentary on the changing structure of the US industry as documented by the numbers in these reports. This commentary is circulated via email and continues to be posted at the University of Nebraska’s Pork Central Website (www.porkcentral.unl.edu). The following is the text of this report. The report itself also included 26 graphs. If you would like to be included in the email distribution of this report, please reply with a comment to this blog and I will add your email address to the distribution list.

As always, this USDA provided several interesting data points that highlight the on-going structural changes in the US pork industry.

To begin with, the 35,000 head decline from one year ago in the breeding herd in Texas almost exactly matches the numbers announced by Smithfield for their closure of their Dalhart, Texas locations. Similarly, the reduction in the Arkansas breeding herd number aligns with the announcement by Tyson of a reduction in their breeding herd numbers.

Other than these 2 announced large declines in breeding herd inventories, the reductions in the US herd were scattered and rather minimal. The US breeding herd stood at 96.9% of the September 1, 2008 number. When combined with the continued improvements in breeding herd efficiencies, there was limited data in this report to suggest a rapid reduction in the flow of pigs to slaughter in the coming months.

Further proof of this unwillingness to aggressively slow production is the fact that farrowing intentions for the September thru November period were 97% of the 2008 period. Assuming producers maintain a 9.7 pig per litter average, versus the 9.50 average of the same period in 2008, the pig crop will be an estimated 28.47 million pigs, down only 300 thousand from the 2008 September thru November crop of 28.77 million pigs. This amounts to only 23,000 fewer pigs per week, not much of a change in total slaughter numbers.

Another sign of a unwillingness to slow production is the price of SEW and 40 pound feeder pigs as reported every Friday by USDA. The average open market delivered price for SEW pigs has risen from a low of $6.91 per head for the week ending August 21 to $23.49 per head for this past week, an increase of  $16.58 per pig in only 5 weeks. Likewise, the average delivered cash price of 40 pound pigs went from $10.43 per pig for the week ending August 14 to $27.43 this past week, an increase of $17 per pig. Both the sharp rise in weaned and feeder pig prices and the decline in feed grain prices (new crop corn closed under $3 per bushel local bid this afternoon) has somewhat eased the pressure for breed to wean producers to sell sows.

At the same time, Iowa producers are showing no willingness to leave finishing facilities empty. Iowa now has 18.4 pigs in the kept for market category for every animal in the breeding inventory. Minnesota has 12.0 and Indiana has 11.9, reflective of their continued growth in finishing relative to farrowing inventories. As a point of reference, the US average is 10.3 market inventory per breeding inventory, the highest ever.

These numbers highlight the on-going advances in productivity of the US breeding herd. For the period June thru August period, the US herd averaged 9.70 pigs per litter, the highest pig crop per litter ever, up from the 9.61 average for the March thru May period of 2009.

The Canadian sow inventory continues to slowly decline. Border crossings of sows and boars destined for slaughter has averaged just over 14,000 animals per week since June 1, up from 11,000 per week last year for the same time period. Their next inventory will be taken on October 1.