Where are the pigs?

           On Tuesday afternoon, the USDA released the December 1 Hogs and Pigs report. While most look to the report for guidance on market price implications, I find the reports fascinating for their tales of the structure an location of the US production base.


            Iowa and southern Minnesota continue to grow in terms of inventory numbers, with all of the growth in the kept for market category. In the 2 year period from December 1, 2006 to December 1, 2008, the Iowa kept for market inventory grew by 2,520,000 head. If we use a 2400 wean-finish barn as a base, this is the equivalent to stocking 1045 new facilities with pigs. In the same time period, Minnesota added 510,000 pigs in the kept for market category, equivalent to stocking 212 new facilities. Anyone involved in pork production in Iowa and southern Minnesota can attest to the large numbers of new wean-finish facilities constructed in these states in the past 2 years.


            During this same time period, the US inventory in the kept for market category increased 3.792 million pigs. This means that 80% of the growth in the kept for market inventory in the past 2 years occurred in Iowa and Minnesota.


            The growth in the kept for market inventory of 3,030,000 head in 2 years for the Iowa and southern Minnesota region would rank them between Indiana and Nebraska in total inventory on the December 1, 2008 report. Iowa and Minnesota now have 42.1% of the kept for market inventory in the US. The 4-state western corn belt region of Iowa, Minnesota, Nebraska and South Dakota has 48.9% of the kept for market inventory.


            Both Iowa and Minnesota remain states that are net importers of pigs into their inventory, as evidenced by the disparity between their percentage of the US breeding herd and their percentage of the kept for market inventory. A primary source of pigs into this inventory has been Canadian feeder pigs, primarily from Manitoba. While the numbers for the final weeks of 2008 are not yet available, it appears that US producers will import approximately 6.8 million pigs weighing 110 lbs or less. In the coming months it will be very interesting to note the impact of COOL on these import numbers. With the large number of newer facilities added to the production base in the past 2 years, the demand for high quality pigs to fill existing facilities will become evident in feeder pig prices. I expect that Canadian pigs will continue to flow into facilities in the western corn belt, but the impact of COOL will be evident in the pricing of these pigs versus pigs of US origin.


For the same 2 year interval, the breeding inventory in both Iowa and Minnesota declined 10,000 head, further highlighting the growth in finishing inventories and net importing of pigs to fill finishing facilities in these states.


            Nebraska has long been thought of as a state that became a net exporter of weaned and feeder pigs to Iowa and southern Minnesota in the mid 1990s. In the latest USDA numbers, Nebraska had 6.08% of the breeding inventory and 4.92% of the kept for market numbers. Illinois is continuing it’s conversion to a state that is a net exporter of feeder pigs. In the latest report, the state had 8.06% of the US breeding inventory and only 6.37% of the kept for market inventory. This suggests that Illinois is now a larger net exporter of weaned pigs than Nebraska.

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