I have been making the circuit of state pork shows and meetings in the past month (IA, MN, VA and OH so far). In visiting with feed company and other allied industry representatives, I am getting many reports of empty finishing barns and frantic interest by some in sourcing pigs to fill sites. However, SEW and feeder pig prices as reported every Friday in the USDA feeder pig market report (www.ams.usda.gov/mnreports/NW_LS255.txt) don’t indicate such a frenzy.
While the numbers vary somewhat, it appears to a consensus that in the eastern Illinois, Indiana and Ohio region there are 80-100,000 grow-finish spaces available or soon to be available. In the Iowa and Southern Minnesota region, the number is larger. While 100,000 empty spaces sounds like there is a large reduction in growing pig inventory, lets put that number in perspective.
If we assume the reports of empty spaces includes a blend of wean-finish (26 weeks per turn) and grow-finish (18 weeks per turn) facilities, we can use a 21 week turnover to estimate impact on weekly slaughter numbers. Let’s assume that there are 300,000 pig spaces idle or becoming idle in the near future. If we divide this by 21 weeks, this is just over 14,000 pigs per week. This is barely a ripple in the tidal flow of pigs coming to slaughter when we look at 2.2+ million pigs per week.
If we use the 21 estimate of average turnover for all facilities, to reduce sales 200,000 pigs per week, we need to have 4.2 million spaces go empty in the US. Granted, my estimate of 21 weeks for an average estimate may be off, and some of the spaces that will become empty are older facilities where the owners have no intention of ever refilling. Even with this older and worn-out facility exemption, it looks like the industry needs to start hearing stories of over 1 million pig spaces available before we can really have confidence that the pig numbers coming to slaughter will decline in large enough numbers to impact the market.
There have been many suggesting that the reduction in SEW and feeder pig imports from Canada will be a major impact on our slaughter numbers. In the first 2 months of 2008, we averaged just over 149,000 Canadian weaned and feeder pig imports. In 2009, we are averaging right at 100,000 head per week. A reduction of 50,000 pigs per week is a reduction, but relative to the need to reduce numbers over 200,000 per week, this is not where the majority of the reduction will come from.
For the first 2 months of 2008, the US imported an average of just over 63,000 Canadian slaughter barrows and gilts per week. So far this year we are averaging 15,000 per week, with only 9940 for the week ending February 7. This is another 45,000+ per week fewer pigs in the US slaughter mix.
Of more interest are the offers some are making to source pigs into paid-for facilities. The norm is around $36/space/year for grow-fin in the upper midwest. I’ve had reports of offers of $20/space if the grower gets to access to the manure. At 2.6 turns/year from grow-fin, this is a $6.15 per pig placed reduction in contract cost to the pig owner. All of this suggests we are not going to reduce US female inventory very fast.