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Early March 1 Hog Inventory Guesses

High corn prices stall breeding herd expansion.

On Friday March 30, USDA will release the results of its latest survey of the U.S. swine inventory.

"My calculations indicate the breeding herd is unchanged from a year ago, the market hog inventory is 2.4% larger and the total herd is 2.2% bigger than on March 1, 2006," says Ron Plain, University of Missouri livestock economist. "Although producers have had good returns during the last three years, I believe sharply higher corn prices have stopped breeding herd growth."

U.S. sow slaughter during December-February was up 5.3% compared to last winter, despite a sow herd that was only 1.3% larger on Dec. 1, 2006. Slaughter sow imports from Canada were only 2% more this winter than last.

Farrowing growth rate slows

For December's Hogs and Pigs Report, producers told USDA they'd hike December-February farrowings by 2.2%. They said they'd farrrow 0.5% more sows in March–May than in 2006. Plain estimates winter farrowings were up 2.1%. He agrees with USDA's findings that spring farrowings will be 0.5% larger than last year. "Summer farrowings will be the same as in June-August 2006," he forecasts.

Plain believes that pigs per litter this winter were up 0.8%, making the December-February pig crop 102.9% of a year ago. Feeder pig imports from Canada were up 4.9% this winter, so the light weight market hog inventory should be up a bit more than the pig crop implies.

Plain's estimates of the March 1 market hog inventory by weight groups are:
* 180 pounds and heavier 103.3%,
* 120-179 pounds 101.5%,
* 60-119 pounds 101.5%,
* Under 60 pounds 103.1% of a year earlier.

Hog slaughter was extremely light the first few days of March because of snow, but the last two weeks have been up 5.9% compared to 2006.

Second quarter hogs could average near $50

"My estimate of the number of hogs in the 60-179 weight groups implies that second quarter hog slaughter will be 1.5% above year-ago levels," says Plain. "Slaughter could be a bit higher if the inflow of market hogs from Canada continues running above year-ago levels. I expect live hog prices to average close to $50 per cwt. in the second quarter of 2007.

"If my estimate of the light weight inventory is correct, third quarter 2007 hog slaughter should be a little over 3% larger than the number slaughtered in July-September 2006," he adds. "If so, look for third quarter 2007 hog prices to average close to $47 on a live basis, down $3 from a year earlier."

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