This release contains additional data in the tables at the end of the report. HOG OUTLOOK January 18, 1996 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------ HOG OUTLOOK, a supplement to the Livestock, Dairy, and Poultry Monthly report, is published five times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. LDP-H-9. Subcriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #LDP-H, $22/year. A consolidated subscription to all of the livestock, dairy, and poultry reports (34 issues/year) is also available as stock #LDP-A, $66/year. ERS-NASS accepts MasterCard and Visa. ------------------------------------------------------------------------------ Rising grain prices since last summer have added nearly $5 per cwt to the cost of raising hogs. Grain price advances over the past quarter will add another $5 to the cost of hogs marketed this winter. Feed costs currently account for about 65 percent of cash expenses on smaller farrow-to-finish operations, but will rise to 70 percent this spring. Higher-cost producers may report significant losses at that time, leading to breeding herd reductions. Sharply higher projected feed use and relatively tight world supplies have boosted international demand for coarse grains. Foreign use of coarse grains in livestock and poultry rations is projected to reach 421 million metric tons in 1995/96, compared to 412 million last year, and the previous 5-year average of 404 million. U.S. livestock and poultry producers also have expanded meat output in spite of prospects for higher ration costs. Strong export sales and seasonally higher feed use contributed to declining grain stocks. Corn stocks on December 1 dropped 24 percent below a year earlier, but remain nearly 3 percent above December 1993. The farm price of corn in December averaged $3.08 per bushel versus $2.13 a year earlier. The season average farm price of corn for the 1995/96 marketing year is projected at $3.00-$3.40 per bushel. Production Increases Could Be Substantial Pork supplies during second-half 1996 could be sharply higher than a year earlier. Year-over-year increases in sows farrowing, more pigs saved per litter, and heavier carcasses weights following last summers's heat related declines could lead to 7 and 6 percent more production in the third and fourth quarter, respectively, from a year earlier. More constrained increases are expected in the spring quarter, following a 2-percent decline during January-March. The divergence between first and second half pork supplies reflects improving profit conditions within the industry over the past 12-14 months. Lower first-quarter 1996 production is a lagged response to declining profits over a year ago and a smaller June-August 1995 pig crop. Last summer, producers still were recovering from negative returns that exceeded $20 per head at times during the fall of 1994. Losses in the fall led to two quarters of higher sow slaughter and reduced gilt retention. By June-August 1995, the number of sows farrowing had declined 3 percent from a year earlier, and the summer pig crop was down 2 percent from 1994. Per capita pork supplies also dropped below a year earlier, and prices advanced sharply on stronger retail and export sales. By August, slaughter hog prices were trading near $50 per cwt for the first time since 1991 and deliberations on earlier losses diminished. Improving profits last summer led to modest herd rebuilding. Producers surveyed in early December reported intentions to have 1 percent more sows farrow during December-February than a year earlier. A 2-percent increase in farrowings is expected during March-May. September- November 1995 farrowings were about unchanged from 1994, but a 2- percent increase in the number of pigs saved per litter added about 400,000 head to the fall pig crop. These animals will reach market weight during the spring quarter, pushing production about 150 million pounds above last year. Pork production this summer will come primarily from the December- February pig crop, which is projected to exceed 24.5 million head. A slight increase in the number of sows farrowing and additional gains in the number of pigs saved per litter will add about 380,000 head to the December-February pig crop. Annual increases in the number of pigs saved per litter continue to average near 2 percent. This year's March-May pig crop could be up nearly 4 percent or over 1 million head from 1995, based on producers' intentions to have 2 percent more sows farrow and assuming gains in the number of pigs saved per litter continue. Most of the breeding activity for the spring pig crop will be completed within the next 6 weeks, and market conditions remain generally favorable. So far, the expansion in farrowings has occurred primarily by limiting culling from breeding herds. Bred gilts entering the breeding herd during September-November 1995 declined nearly 13 percent from a year earlier while sow slaughter fell 15 percent. USDA weekly sow slaughter data continue to suggest producers are proceeding with plans to increase sow farrowings. The first signs of possible breeding herd reduction will appear as an increase in weekly sow slaughter. Sow slaughter will have to move above 4 percent of total hog slaughter for several weeks to confirm this change in producer strategies. Rising grain prices over the past quarter have pushed production costs higher, and some hogs likely already are being sold below breakeven. ERS farrow-to-finish budgets reflect a sharp rise in feed costs in early 1996. However, the increase only reflects prices changes that occurred late in the summer prior to harvest. Additional price gains since then will not be reflected in ERS budgets until late spring/early summer when cash operating costs are projected to reach the mid-$40's per cwt. Feed costs are imputed based on two decision points. One-third of the cost is incurred when the sows are bred and the remaining two-thirds when the weaned pigs are moved into the finishing barn for the grow-out phase. Both periods together cover approximately 9 months. Thus, ERS budgets are only now beginning to reflect the sharp rise in grain prices since late summer. The budget simulators run by ERS represent the "average" hog producer who still is relatively small, with fewer than 100-150 breeding animals. These budgets do not represent a growing segment of the sector that buys grain on a weekly basis and incorporates the current market prices into its production cost calculations. These operations already have absorbed the higher grain prices, yet continued to expand as indicated in the December hog and pig survey. North Carolina, which likely best represents the largest commercial operations, reported December-February farrowing intentions up 16 percent from last year. The larger operations typically have a lower cost structure due to economies of size and improved management specialization that can sharply reduce production costs. ERS's Farm Costs and Returns Survey from 1992 showed feed costs for "low cost" farrow-to-finish operations averaged $19.56 per cwt of gain, versus $26.18 for "mid-cost" producers and $41.37 for "high cost" producers. Total cash expenses for these operations ranged from $27.56 to $59.75 between the "low cost" and "high cost" operations. Rising production costs in 1996 are expected to squeeze profit margins for most producers. Losses could be considerable for higher cost producers who likely will begin to reduce breeding herds this spring. Cash hog prices are forecast to range in the lower $40's per cwt this winter, decline seasonally into the spring, and show a slight seasonal gain during the summer quarter, but still average near $40 per cwt. Prices next fall may decline to the mid-$30's per cwt based on current production estimates. Hog inventories are projected to be down slightly a year from now, with the most severe cutbacks in states with large numbers of smaller producers. The number of U.S. hog operations in 1995 dropped to 182,700, 12 percent below the previous year. A similar decline is likely in 1996. This contrasts with continued growth of the largest operations which expanded their share of the U.S. inventory from 37 percent in 1994 to 43 percent in 1995. These operations represent less than 3 percent of the total hog farms, and nearly one-fourth of these operations are located in North Carolina. Modest Retail Price Declines Expected Lower retail pork prices are expected in 1996. Declines may be small, but rising pork production during second-half 1996 and large competing meat supplies will provide retailers ample opportunities to lower prices while protecting margins. Processor margins may be tight until market hog supplies pick up in the second half of the year, but higher volumes at that time should increase margins. Retail pork prices averaged near $1.95 in 1995, versus $1.98 a year earlier. Prices may average about 1 cent lower in 1996, but greater declines in the live animal price are expected to cause the farm-retail spread to widen. The farm-retail spread dropped 7 cents in 1995 from its 1994 record, with declines in the farm-wholesale and wholesale-retail spread about even. Producers' share of consumer expenditures on pork rose slightly in 1995, averaging near 34 percent versus 32 in 1994. Variations within the year were extreme, however, as cash markets ranged from $38-$48 during the year and the producers' share jumped from 30 to 40 percent. For 1996, rising production beginning in the second quarter is expected to limit seasonal price gains for hogs and hold producers' share of the retail dollar well below 40 percent. U.S. Becomes Net Pork Exporter The U.S. probably became a net exporter of pork in 1995 for the first time in over 40 years. Exports exceeded imports by about 130 million pounds, carcass weight basis. Exports have continued to surge in recent years, while rising domestic production and lower prices, together with lower U.S. dollar exchange rates have created a less attractive market for trading partners in the European Community. U.S. imports from Denmark and the Netherlands in 1995 fell more than 40 percent from a year ago. Japan remains the dominant destination for U.S. pork exports. Last year's decline in the U.S. dollar relative to the Japanese yen made our products even more attractively priced. During the past few years, Japanese buyers have increased the amount of fresh chilled pork imported from all sources. This category now represents over two-thirds of U.S. shipments. Taiwan is a major competitor for both fresh chilled and frozen products, while Denmark competes with the U.S. in the lower-valued frozen market. The 1996 outlook for exports to Japan is clouded by the decision to impose the Safeguard mechanism on all imported pork, beginning November 1, 1995, and extending through the end of Japan's fiscal year, March 31, 1996. The Safeguard mechanism was imposed because the cumulative quantity of imports during the first three quarters of the current fiscal year (April-March) exceeded 119 percent of the cumulative imports during the first three quarters of the previous 3 years. The Safeguard mechanism effectively increases the entry price of pork into Japan (the "gateprice") by 24 percent. The Safeguard mechanism is expected to reduce frozen imports more than fresh chilled products because Japanese buyers anticipated the gateprice increase and accumulated frozen stocks to meet domestic demand while the Safeguard is in effect. [The stocks-to-use ratio increased from 80 percent in September to 116 in October.] Also, because retailers charge higher prices for fresh chilled table pork in Japan, the gateprice increase can be absorbed more readily if importers decide to reduce their margins. The higher gateprice is expected to reduce U.S. exports to Japan by 20 to 40 percent during November-March, and the likelihood that the Safeguard will be re-triggered as early as summer 1996 already is being factored into 1996 export forecasts. Several exporting countries already may be accumulating frozen stocks in anticipation of a higher gateprice later in the year. Danish stocks are being accumulated under the European Union's Aid to Private Storage Program (APS). The APS program, which began in November, pays a per-ton subsidy to store pork cuts for export, for up to 4 months. After Japan, Russia was the largest importer of U.S. pork in the first three quarters of 1995. Sales to Russia were enhanced by EEP bonuses through March 1995. Since July, shipments have been on a commercial basis. Most of this product has been lower-valued trimmings material used in sausage formulas as well as hot dogs. The U.S. increased its exports of frozen pork to the Republic of Korea (ROK) more than seven-fold in the first three quarters of 1995, due mainly to the market access created by the GATT treaty. On October 1, an agreement between the U.S. and ROK extending shelf-life limits was negotiated for fresh chilled pork. This agreement, if implemented, could expand market opportunities for U.S. fresh chilled pork. Growth of the fresh chilled market in ROK is dependent on development of streamlined administrative procedures, functional marketing channels, and construction of refrigeration facilities to accommodate fresh chilled products. Taiwan and Hong Kong were significant importers of U.S. pork in 1995. Taiwan imported over 15 times more U.S. pork than the previous year, due primarily to high domestic prices. Some of the U.S. pork is re-exported to Japan. Hong Kong also functions as a re-export point for U.S. pork to China. In the first three quarters of 1995, Hong Kong imported almost four times more U.S. pork than in the same period of 1994. Re-exports to China have reportedly slowed as China has increased the levels of border surveillance. U.S.-Canadian Trade Grows Canada remained a large net exporter of slaughter hogs and pork products to the U.S. in the first three quarters of 1995. A depreciated Canadian dollar, larger domestic supplies, and lower prices have been attractive to U.S. processors and meat buyers. Canadian hog numbers are expected to peak at 11.2 million head in 1995, and decline slightly to 11.1 million head in 1996. Although USDA expects Canadian imports of U.S. pork to increase 14 percent in 1996, Canada will continue to export more hogs and pork products to the U.S. than it imports. The strict quarantine for pseudorabies that Canada imposes on U.S. hog imports likely will remain in place in 1996. Canada is currently "free" of this disease. In response to pressure by Ontario processors and others, risk assessment studies have been conducted over the past 2 years to bring about the re-opening of Canada to U.S. live hogs. The studies support a proposed protocol to permit live imports from "low risk" U.S. states. However, opposition from Canadian hog breeders and producers is keeping the protocol from becoming a formal regulatory proposal. European Trade In Transition For Europe, the U.S.'s major competitor in world pork trade, 1995 was a year of lower cyclical production, higher domestic prices, GATT-mandated constraints on subsidized pork exports, and GATT-mandated minimum import access to domestic EU pork markets. Subsidized EU pork exports are restricted in the first year (July 1995-June 1996) of the six year GATT implementation period, to 490,000 metric tons, a significant drop from 1994 exports of 864,000 metric tons. In February, the EU modified export subsidies destined for specific export markets. Export subsidies were eliminated on several frozen boneless cuts typically destined for the Japanese market. Subsidies were retained on lower- valued bone-in cuts typically exported to Russia. Export subsidies on products exported to the U.S. were increased, as a means of holding market share during a period of low U.S. prices. In the first year of GATT implementation, the EU must allow minimum market access to 7,000 metric tons of fresh loins and cuts, (bone-in), and 6,500 metric tons of frozen boneless loins and hams. One U.S. processor is currently certified to export to the EU. Several others expect certification in 1996. GATT-mandated limitations on export subsidies will severely limit the potential with high-labor cost countries such as France and the Netherlands to develop into major pork exporters. This will leave Denmark as the primary European pork exporter. Denmark has responded to GATT export limitations by exporting without subsidy to Japan, re-targeting pork shipments into the newly acceded EU countries (Sweden, Finland, and Austria), and focusing on development and maintenance of market share in Russia and Eastern Europe. EU pork producers and processors are confronting other issues that may limit future growth. Environmental and animal welfare regulations have sharply increased production costs. Land use restrictions in Denmark and the Netherlands also are limiting growth, leaving France as the only nation with available land to increase production. Trade implications for the U.S. are thus generally positive, as high EU costs will limit export increases and create market opportunities for lower-cost U.S. pork. U.S. LIVESTOCK & MEAT IMPORTS & EXPORTS ------------------------------------------------------------------------- Jan-Oct Jan-Oct 1992 1993 1994 1994 1995 ------------------------------------------------------------------------- Carcass wt., thousand lb. Pork Imports Canada 391,233 402,275 421,768 353,919 381,533 Denmark 168,908 233,772 244,545 213,861 118,605 Poland 13,192 13,834 11,581 8,985 9,578 Hungary 21,323 29,933 18,210 16,200 9,627 Netherlands 16,894 22,771 16,769 14,299 8,600 Other 33,955 37,613 30,896 26,573 27,730 Total 645,505 740,197 743,769 633,838 555,674 Pork Exports Japan 212,591 220,933 239,876 197,581 313,728 Canada 31,430 36,364 52,902 41,904 44,121 Mexico 107,747 92,986 150,252 118,236 48,389 Caribbean 9,523 8,669 8,351 5,594 8,615 Other 45,042 76,169 80,607 46,172 234,510 Total 406,332 435,121 531,988 409,486 649,364 Head Hog Imports Canada 669,769 837,832 914,755 736,629 1,404,230 Under 110 lb 226,896 280,813 401,981 321,442 557,964 Total 674,469 840,050 921,274 742,126 1,406,599 Hog Exports Total 105,631 40,636 136,148 73,521 10,207 Carcass wt.,thousand lb. Beef & Veal Import Australia 1,011,508 905,801 876,360 760,145 578,156 New Zealand 639,048 561,947 527,877 471,035 521,763 Canada 331,128 407,395 460,720 390,973 365,764 Brazil 80,497 109,802 125,782 120,360 56,693 Argentina 194,045 161,809 141,145 117,361 147,778 Other 183,550 254,576 236,985 195,281 140,795 Total 2,439,775 2,401,329 2,368,871 2,055,155 1,810,949 Beef & Veal Export Japan 629,127 719,769 832,429 696,795 828,898 Canada 249,416 243,549 285,716 226,765 256,089 Mexico 194,896 120,017 223,022 181,012 78,583 Korea, Rep. 164,524 116,162 177,286 137,270 211,467 Other 85,831 75,546 92,346 69,405 111,316 1,323,794 1,275,042 1,610,800 1,311,246 1,486,353 Commercial hog slaughter, production, and prices 1/ --------------------------------------------------------------------- Slt'r hog Barrows Boars & Comm'l Iowa/ Year & gilts Sows stags Total prod. S. Minn --------------------------------------------------------------------- -----------1,000 hd.---------------- 1,000 lb. $/cwt 1991 I 20,463 844 198 21,505 3,900 52.36 II 19,846 877 199 20,922 3,792 54.31 III 20,176 1,006 194 21,376 3,822 51.28 IV 23,183 1,000 183 24,366 4,434 40.80 Year 83,668 3,727 774 88,169 15,948 49.69 1992 I 22,635 959 208 23,802 4,321 39.55 II 20,988 991 223 22,202 4,033 45.70 III 22,437 1,082 227 23,746 4,263 44.39 IV 23,904 1,019 215 25,138 4,567 42.48 Year 89,964 4,051 873 94,888 17,184 43.03 1993 I 21,935 903 219 23,057 4,204 44.83 II 21,516 910 235 22,661 4,151 47.59 III 21,535 1,017 225 22,777 4,140 48.05 IV 23,401 966 207 24,574 4,535 43.93 Year 88,387 3,796 886 93,069 17,030 46.10 1994 I 21,600 916 226 22,742 4,181 45.70 II 21,806 920 240 22,966 4,239 42.90 III 22,407 1,035 232 23,674 4,326 40.50 IV 24,945 1,140 230 26,315 4,912 31.03 Year 90,758 4,011 928 95,697 17,658 40.03 1995 I 23,042 946 241 24,229 4,488 38.56 II 22,499 924 223 23,646 4,394 38.91 III 22,061 981 222 23,264 4,240 48.75 IV 2/ 24,087 914 197 25,198 4,700 43.19 Year 2/ 91,689 3,765 883 96,337 17,822 42.35 1996 I 3/ 23,800 4,400 41-43 II 3/ 24,000 4,450 37-39 III 3/ 24,600 4,525 38-42 IV 3/ 26,800 4,950 35-37 Year 3/ 99,200 18,325 38-40 1/ Classes estimated. 2/ Preliminary. 3/ Forecast. Federally inspected hog slaughter ------------------------------------------------------------------------- Week Hogs % Chg Barrows/gilts % Chg Sows % Chg ended 1/ 1994 1995 95/94 1994 1995 95/94 1994 1995 95/94 ------------------------------------------------------------------------- 1,000 hd % 1,000 hd % 1,000 hd % Jan. 7 1777 1822 2 1692 1722 2 72 82 15 14 1857 1994 7 1762 1896 8 76 80 5 21 1601 1628 2 1531 1550 1 58 65 12 28 1732 1791 3 1638 1700 4 77 73 -4 Feb. 4 1731 1752 1 1641 1673 2 72 61 -15 11 1643 1781 8 1559 1694 9 67 71 7 18 1698 1810 7 1608 1730 8 72 69 -4 25 1714 1887 10 1632 1798 10 65 68 5 Mar. 4 1756 1908 9 1667 1816 9 71 71 -0 11 1826 1888 3 1737 1803 4 70 68 -3 18 1769 1808 2 1678 1720 2 72 71 -2 25 1751 1876 7 1661 1784 7 71 73 4 Apr. 1 1799 1837 2 1714 1752 2 66 66 -0 8 1741 1788 3 1655 1713 3 67 61 -9 15 1817 1819 0 1729 1733 0 70 67 -4 22 1810 1824 1 1726 1742 1 66 66 -1 29 1802 1859 3 1720 1773 3 65 67 2 May. 6 1796 1867 4 1708 1779 4 71 69 -2 13 1768 1876 6 1685 1789 6 66 69 6 20 1749 1774 1 1663 1689 2 69 69 1 27 1730 1769 2 1642 1686 3 70 87 25 June 3 1489 1603 8 1414 1526 8 59 63 6 10 1731 1762 2 1635 1667 2 77 79 3 17 1675 1722 3 1583 1629 3 74 76 3 24 1634 1702 4 1539 1615 5 75 72 -4 July 1 1644 1735 6 1549 1637 6 77 79 3 8 1444 1466 2 1367 1391 2 62 62 0 15 1752 1687 -4 1647 1595 -3 87 70 -19 22 1652 1702 3 1559 1605 3 75 80 7 29 1713 1683 -2 1616 1585 -2 78 79 1 Aug. 5 1680 1733 3 1584 1637 3 79 78 -2 12 1773 1704 -4 1677 1610 -4 79 77 -2 19 1757 1780 1 1664 1691 2 77 73 -6 26 1780 1817 2 1684 1727 3 79 74 -6 Sept. 2 1819 1795 -1 1722 1701 -1 80 75 -7 9 1638 1650 1 1554 1570 1 69 65 -5 16 1973 1896 -4 1879 1804 -4 77 76 -2 23 2000 1888 -6 1905 1801 -5 79 71 -10 30 1976 1888 -4 1876 1797 -4 83 75 -10 Oct. 7 1969 1899 -4 1570 1814 16 82 70 -15 14 1984 1834 -8 1886 1751 -7 81 67 -18 21 2037 1907 -6 1935 1829 -5 85 63 -27 28 2027 1993 -2 1928 1908 -1 83 70 -15 Nov. 4 2053 2003 -2 1946 1912 -2 89 74 -17 11 1985 1981 -0 1873 1894 1 93 72 -23 18 2059 2011 -2 1945 1917 -1 95 77 -19 25 1697 1724 2 1617 1654 2 67 57 -15 Dec. 2 2086 1994 -4 1974 1906 -3 92 73 -21 9 2087 1914 -8 1973 1823 -8 95 74 -22 16 2002 1890 -6 1893 1808 -5 92 69 -25 23 1796 1840 2 1694 1752 3 82 71 -13 30 1660 1671 1 1578 1606 2 69 56 -20 ------------------------------------------------------------------------- 1/ Corresponding dates to 1995; 1993, Jan. 9; 1994, Jan. 8. Hogs on farms, farrowings, and pig crops, U.S. ------------------------------------------------------------ Change from Inventory 1994 1995 1996 previous year ------------------------------------------------------------ 1,000 head Percent March 1 inventory 57,350 58,465 2.0 Breeding 7,210 6,998 -3.0 Market 50,140 51,467 3.0 Under 60 lb 18,780 19,251 3.0 60-119 lb 12,190 12,498 3.0 120-179 lb 10,430 10,594 2.0 180 + lb 8,740 9,124 4.0 June 1 inventory 60,715 60,160 -1.0 Breeding 7,565 7,245 -4.0 Market 53,150 52,915 0.0 Under 60 lb 22,125 21,400 -3.0 60-119 lb 13,145 13,195 0.0 120-179 lb 9,825 10,005 2.0 180 + lb 8,055 8,315 3.0 Sept. 1 inventory 62,320 61,060 -2.0 Breeding 7,415 7,068 -5.0 Market 54,905 53,992 -2.0 Under 60 lb 20,790 20,390 -2.0 60-119 lb 13,960 13,627 -2.0 120-179 lb 11,170 11,080 -1.0 180 + lb 8,985 8,895 -1.0 Dec. 1 inventory 59,992 60,190 0.0 Breeding 7,061 7,133 1.0 Market 52,932 53,057 0.0 Under 60 lb 19,558 19,984 2.0 60-119 lb 13,087 13,105 0.0 120-179 lb 10,941 10,832 -1.0 180 + lb 9,346 9,136 -2.0 Sows farrowing Dec.-Feb. 1/ 2,885 2,886 2,922 1.0 March-May 3,389 3,260 3,310 2.0 Dec.-May 1/ 6,274 6,146 6,232 1.0 June-August 3,107 3,006 -3.0 Sept.-Nov. 2,995 2,986 0.0 June-Nov. 6,102 5,992 -2.0 Pig crop Dec.-Feb. 1/ 23,368 23,860 2.0 March-May 27,976 27,120 -3.0 Dec.-May 1/ 51,344 50,980 -1.0 June-August 25,547 25,007 -2.0 Sept.-Nov. 24,509 24,907 2.0 June-Nov. 50,056 49,914 0.0 Number Pigs per litter Dec.-Feb. 1/ 8.10 8.27 2.0 March-May 8.25 8.32 1.0 Dec.-May 1/ 8.18 8.29 1.0 June-August 8.22 8.32 1.0 Sept.-Nov. 8.18 8.34 2.0 June-Nov. 8.20 8.33 2.0 ------------------------------------------------------------ 1/ December preceding year. 2/ Intentions Hogs on farms, farrowings, and pig crops, 16 States ------------------------------------------------------------ Change from Inventory 1994 1995 1996 previous year ------------------------------------------------------------ 1,000 head Percent March 1 inventory 52,150 53,215 2.0 Breeding 6,460 6,198 -4.0 Market 45,690 47,017 3.0 Under 60 lb 17,010 17,451 3.0 60-119 lb 11,085 11,388 3.0 120-179 lb 9,620 9,774 2.0 180 + lb 7,975 8,404 5.0 June 1 inventory 55,315 54,590 -1.0 Breeding 6,735 6,395 -5.0 Market 48,580 48,195 -1.0 Under 60 lb 20,145 19,320 -4.0 60-119 lb 11,945 11,975 0.0 120-179 lb 9,015 9,175 2.0 180 + lb 7,475 7,725 3.0 Sept. 1 inventory 56,620 55,360 -2.0 Breeding 6,705 6,368 -5.0 Market 49,915 48,992 -2.0 Under 60 lb 18,740 18,240 -3.0 60-119 lb 12,725 12,427 -2.0 120-179 lb 10,260 10,180 -1.0 180 + lb 8,190 8,145 -1.0 Dec. 1 inventory 54,660 54,510 0.0 Breeding 6,280 6,303 0.0 Market 48,380 48,207 0.0 Under 60 lb 17,795 18,055 1.0 60-119 lb 11,980 11,999 0.0 120-179 lb 9,995 9,898 -1.0 180 + lb 8,610 8,255 -4.0 Sows farrowing Dec.-Feb. 1/ 2,603 2,581 2,622 2.0 March-May 3,067 2,930 2,955 1.0 Dec.-May 1/ 5,670 5,511 5,577 1.0 June-August 2,794 2,681 -4.0 Sept.-Nov. 2,697 2,664 -1.0 June-Nov. 5,491 5,345 -3.0 Pig crop Dec.-Feb. 1/ 21,028 21,267 1.0 March-May 25,334 24,350 -4.0 Dec.-May 1/ 46,362 45,617 -2.0 June-August 22,927 22,255 -3.0 Sept.-Nov. 22,044 22,177 1.0 June-Nov. 44,971 44,432 -1.0 Pigs per litter Dec.-Feb. 1/ 8.08 8.24 2.0 March-May 8.26 8.31 1.0 Dec.-May 1/ 8.18 8.28 1.0 June-August 8.21 8.30 1.0 Sept.-Nov. 8.17 8.32 2.0 June-Nov. 8.19 8.31 2.0 ------------------------------------------------------------ 1/ December preceding year. 2/ Intentions Hog breeding herd changes, United States ---------------------------------------------------------------------------- Item 1992 1993 1994 1995 1996 ---------------------------------------------------------------------------- Inventory change: December 1 breeding 1/ 7,229 7,109 7,165 7,061 December-February Sow slaughter 983 939 919 1,010 Stag/boar slaughter 197 213 205 233 Gilts/boars added 1,106 1,083 1,169 1,180 % of inventory 15.3% 15.2% 16.3% 16.7% March 1 breeding 7,155 7,040 7,210 6,998 March-May Sow slaughter 934 896 914 907 Stag/boar slaughter 220 235 243 235 Gilts/boars added 1,519 1,411 1,512 1,389 % of inventory 21.2% 20.0% 21.0% 19.8% June 1 breeding 7,520 7,320 7,565 7,245 June-August Sow slaughter 1,096 1,002 1,030 1,017 Stag/boar slaughter 228 225 242 232 Gilts/boars added 1,094 1,037 1,122 1,072 % of inventory 14.5% 14.2% 14.8% 14.8% September 1 breeding 7,290 7,130 7,415 7,068 September-November Sow slaughter 1,019 976 1,093 924 Stag/boar slaughter 216 217 225 204 Gilts/boars added 1,054 1,228 964 1,193 % of inventory 14.5% 17.2% 13.0% 16.9% Sows entering breeding herd: December-February 1/ Sows farrowing 2,892 2,808 2,885 2,886 2,922 2/ Sow slaughter 983 939 919 1,010 % of inventory 34.0% 33.4% 31.9% 35.0% Sows added 1,459 1,351 1,423 1,384 % of inventory 43.3% 42.0% 42.0% 42.5% March-May Sows farrowing 3,368 3,220 3,389 3,260 3,310 2/ Sow slaughter 934 896 914 907 % of inventory 27.7% 27.8% 27.0% 27.8% Sows added 586 648 632 653 % of inventory 19.4% 21.8% 20.3% 21.7% June-August Sows farrowing 3,020 2,972 3,107 3,006 Sow slaughter 1,096 1,002 1,030 1,017 % of inventory 36.3% 33.7% 33.2% 33.8% Sows added 1,068 1,012 918 997 % of inventory 35.7% 33.9% 30.7% 33.4% September-November Sows farrowing 2,992 2,982 2,995 2,986 Sow slaughter 1,019 976 1,093 924 % of inventory 34.1% 32.7% 36.5% 30.9% Sows added 835 879 984 860 % of inventory 29.7% 30.5% 34.1% 29.4% ------------------------------------------------------------------------------ 1/ December preceding year 2/ Estimate Farrow-to-finish hog production costs and returns 1,600 head annual sales, North Central Region 1/ ------------------------------------------------------------------------------ Item Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 ------------------------------------------------------------------------------ Cash receipts: 2/ Market hogs (94.25 lb) 44.50 46.52 46.17 43.29 37.91 42.46 Cull sows (5.75 lb) 1.89 2.23 2.30 2.49 2.08 2.10 Total 46.39 48.75 48.47 45.78 39.99 44.56 Cash expenses: Feed-- Corn (345.6 lb) 12.90 13.07 13.24 13.94 14.56 14.54 Soybean meal (70.6 lb) 7.43 6.89 6.80 6.83 7.15 7.16 Mixing concentrates (14.3 lb) 3.11 3.10 3.10 3.10 3.12 3.12 Total feed 23.44 23.06 23.14 23.87 24.83 24.82 Other-- Veterinary and medicine 3/ 1.29 1.28 1.28 1.28 1.29 1.29 Fuel, lube, and electricity 1.26 1.41 1.41 1.41 1.33 1.33 Mach. and building repairs 1.38 1.38 1.38 1.38 1.38 1.38 Hired labor 4/ 2.64 2.64 2.64 2.66 2.66 2.66 Miscellaneous 2.26 2.29 2.29 2.29 2.30 2.30 Total variable expenses 32.27 32.07 32.15 32.89 33.79 33.78 General farm overhead 1.40 1.42 1.42 1.42 1.43 1.43 Taxes and insurance 0.87 0.87 0.87 0.87 0.87 0.87 Interest 2.27 2.27 2.27 2.27 2.33 2.33 Total fixed expenses 4.53 4.56 4.56 4.56 4.63 4.63 Total cash expenses 5/ 36.80 36.63 36.71 37.45 38.42 38.41 Receipts less cash expenses 9.59 12.12 11.76 8.33 1.57 6.15 Capital replacement 10.52 10.62 10.62 10.62 10.74 10.74 Receipts less cash expenses 47.32 47.25 47.33 48.07 49.16 49.15 and replacement -0.93 1.50 1.14 -2.29 -9.17 -4.59 ------------------------------------------------------------------------------ 1/The feed rations and expense items do not necessarily coincide with the experience of individual hog operations. 2/ Based on 94.25 lb of barrows and gilts liveweight and 5.75 lb of of sows per cwt sold. 3/ Includes costs of feed medication. 4/ Based on .204 hours per cwt of liveweight hog marketed. 5/ Does not include a charge for family or operator labor Corn Belt hog feeding: Selected costs at current rates 1/ ------------------------------------------------------------------------------ Purchased during: Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Marketed during: Nov-95 Dec-95 Jan-96 Feb-96 Mar-96 Apr-96 ------------------------------------------------------------------------------ Expenses: ($/head) 33.00 30.00 33.29 31.56 28.03 28.75 40-50 lb feeder pig 29.04 28.55 29.26 30.69 31.79 33.88 Corn (11 bu) 19.09 19.09 19.09 20.40 20.40 20.40 Protein supplement (130 lb) 48.13 47.64 48.35 51.09 52.19 54.28 Total feed 15.78 15.78 15.78 15.78 15.78 15.78 Labor & management (1.3 hr) 3.26 3.26 3.26 3.29 3.29 3.29 Vet medicine 2/ 1.10 1.00 1.11 1.05 0.94 0.96 Interest on purchase (4 mo) Power, equip, fuel, 8.13 8.13 8.13 8.19 8.19 8.19 shelter deprec. 2/ 1.32 1.20 1.33 1.26 1.12 1.15 Death loss (4% of purchase) 0.82 0.82 0.82 0.83 0.83 0.83 Transportation (100 miles) 1.14 1.14 1.14 1.14 1.14 1.14 Marketing expenses 0.83 0.83 0.83 0.84 0.84 0.84 Misc. & indirect costs 2/ 113.51 109.80 114.04 115.03 112.35 115.21 Total Selling price required to cover: ($/cwt) 33.80 32.35 34.02 34.44 33.43 34.60 Feed and feeder costs (220 lb 47.30 45.75 47.52 47.93 46.81 48.00 All costs (220 lb) Feed cost per 26.74 26.47 26.86 28.38 28.99 30.16 100-lb gain (180 lb) 39.69 43.73 Barrows and gilts, (6 mkts) -7.61 -2.02 Net margin Prices: 40-lb feeder pig 28.87 30.00 33.29 31.56 28.03 28.75 (So. Missouri) $/head 2.64 2.60 2.66 2.79 2.89 3.08 Corn $/bu 3/ 14.69 14.69 14.69 15.70 15.70 15.70 Protein supp. 38-42% $/cwt 3/ 12.14 12.14 12.14 12.14 12.14 12.14 Labor & management $/hr 4/ 10.02 10.02 10.02 10.02 10.02 10.02 Interest rate, annual Transportation rate 0.37 0.37 0.37 0.38 0.38 0.38 ($/cwt 100 miles) 5/ 1.14 1.14 1.14 1.14 1.14 1.14 Marketing Expenses ($/cwt) 6/ Index of prices paid by 1411 1411 1411 1422 1422 1422 farmers (1910-14=100) ------------------------------------------------------------------------------ 1/ Costs represent only what expenses would be if all selected items were paid for during the period indicated and do not necessarily coincide with the experience of individual feeders. 2/ Adjusted monthly by the index of prices paid by farmers for commodities, services, interest, taxes, and wage rates. 3/ Average price received by farmers in Iowa and Illinois. 4/ Assumes an owner-operator receiving twice the farm labor rate. 5/ Converted from cents/mile for a 44,000-pound haul. 6/ Yardage Pork: Retail, wholesale, and farm values, spreads, and farmers' share ---------------------------------------------------------------------- Gross By- Net Year Retail Wholesale farm product farm price 1/ value 2/ value 3/ allowance 4/ value 5/ Total ---------------------------------------------------------------------- ---------------------- Cents per pound ------------------- 1990 212.6 118.3 92.6 5.4 87.2 125.4 1991 211.9 108.9 83.1 4.7 78.4 133.5 1992 198.0 98.9 72.0 4.2 67.8 130.2 1993 197.6 102.9 77.3 4.8 72.5 125.1 I 194.6 98.9 75.2 4.7 70.5 124.1 II 194.2 103.5 79.5 4.9 74.6 119.6 III 200.2 104.7 80.7 4.9 75.8 124.4 IV 201.5 104.3 73.6 4.5 69.1 132.4 1994 198.1 98.9 67.4 4.5 62.9 135.2 I 200.8 106.5 76.9 4.7 72.2 128.6 II 198.8 101.5 72.2 4.6 67.6 131.2 III 199.0 98.6 67.9 4.6 63.3 135.7 IV 193.6 89.0 52.5 4.0 48.5 145.1 1995 Jan. 191.4 91.1 63.7 4.7 59.0 132.4 Feb. 189.9 93.0 66.8 4.9 61.9 128.0 Mar. 193.5 91.4 64.3 4.6 59.7 133.8 I 191.6 91.8 64.9 4.7 60.2 131.4 Apr. 190.6 90.0 60.9 4.3 56.6 134.0 May 191.0 92.9 63.7 4.3 59.4 131.6 June 189.0 99.2 73.6 4.8 68.8 120.2 II July 191.4 101.6 80.0 5.3 74.7 116.7 Aug. 197.3 106.1 83.8 5.5 78.3 119.0 Sept 198.0 106.8 82.3 5.6 76.7 121.3 III 195.6 104.8 82.1 5.5 76.6 119.0 Oct. 202.4 107.9 77.6 5.4 72.2 130.2 Nov. 200.8 100.8 67.5 4.7 62.8 138.0 Dec. IV Year 1/ Estimated weighted-average of BLS prices of retail cuts from pork pork carcass. 2/ Value of wholesale quantity equivalent to 1 lb of retail cuts. A wholesale-carcass equivalent of 1.06 is used. 3/ Market values to producer for 1.7 lb of live animal, equivalent to 1 lb of retail cuts. 4/ Portion of gross farm value attributable to edible and inedible by-products. 5/ Gross farm value minus by-product allowance. 6/ Percent net farm value is of retail price. Pork spreads -------------------------------------- Farm-Retail Spread Year Wholesale- Farm- Farmers' retail wholesale share 6/ -------------------------------------- 1990 94.3 31.1 41.0 1991 103.0 30.5 37.0 1992 99.1 31.1 34.2 1993 94.7 30.4 36.7 I 95.7 28.4 36.2 II 90.7 28.9 38.4 III 95.5 28.9 37.9 IV 97.2 35.2 34.3 1994 99.2 36.0 31.8 I 94.3 34.3 36.0 II 97.3 33.9 34.0 III 100.4 35.3 31.8 IV 104.6 40.5 25.1 1995 Jan. 100.3 32.1 30.8 Feb. 96.9 31.1 32.6 Mar. 102.1 31.7 30.9 I 99.8 31.6 31.4 Apr. 100.6 33.4 29.7 May 98.1 33.5 31.1 June 89.8 30.4 36.4 II 96.2 32.4 32.4 July 89.8 26.9 39.0 Aug. 91.2 27.8 39.7 Sept 91.2 30.1 38.7 III 90.8 28.2 39.2 Oct. 94.5 35.7 35.7 Nov. 100.0 38.0 31.3 Dec. IV Year Selected price and slaughter statistics for meat animals and meat ------------------------------------------------------------------------------ Item Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 5/ ------------------------------------------------------------------------------ Hog prices: Barrows and gilts 230-250 lb Iowa/S. Minn. No. 1-3 47.69 49.68 48.89 45.59 39.93 44.04 Sioux City 47.18 49.46 48.67 45.42 40.02 43.80 6 markets 1/ 47.10 49.43 48.44 45.15 39.69 43.73 Sows: 6 markets 1/ 30.37 35.92 36.94 39.79 33.16 33.24 Feeder pigs: No. 1 & 2, So. Mo., 40-50 lb (per hd.) 28.87 30.00 33.29 31.56 28.03 28.75 Slaughter Steers: Choice, 1100-1300 lb Nebraska direct 62.54 62.18 63.23 64.44 67.51 66.34 Farm prices: Hogs 46.20 48.60 48.30 45.60 39.90 44.30 Beef cattle 59.50 59.40 59.10 58.80 60.70 60.60 Meat prices: Wholesale Central U.S. markets Pork cut-out, #2 2/ 63.66 67.91 67.10 66.49 60.67 62.46 Pork loins 14-18 lb 124.65 127.98 117.63 108.23 93.94 110.39 Pork bellies 12-14 lb 43.10 52.42 54.43 56.20 47.28 51.45 Hams, skinned 17-20 lb 56.49 62.80 70.24 72.00 75.45 63.15 20-26 lb 59.64 64.27 70.92 69.45 64.55 55.99 Boxed beef cut-out Choice, 1-3 700-850 lb 103.24 101.78 104.12 106.85 107.14 104.01 Retail prices Pork 191.40 197.30 198.00 202.40 200.80 NA Bacon, sliced 190.60 196.80 204.20 211.70 215.50 NA Chops, center cut 321.20 325.60 330.60 328.70 326.50 NA Ham, rump or shank 152.60 162.10 158.70 163.40 154.20 NA Sirloin roast 225.80 229.70 232.70 234.90 235.90 NA Picnic, smoked 108.70 112.80 108.30 114.10 117.50 NA Sausage, fresh 186.20 190.10 188.80 196.00 192.80 NA Beef, Choice 287.40 284.40 283.50 285.30 286.40 NA Composite broiler 140.90 141.80 147.00 145.40 149.70 NA Price indexes: (BLS) All meats 134.20 135.10 135.50 137.00 137.70 NA Beef and veal 133.50 133.00 133.30 134.30 135.20 NA Pork 133.70 136.00 137.80 139.10 139.70 NA Poultry 142.50 142.80 145.90 146.10 146.30 NA Commercial: 4/ Slaughter Hogs 7,075 8,265 7,924 8,536 8,595 8,066 Barrows and gilts 6,684 7,829 7,548 8,164 8,215 7,708 Sows 319 354 308 304 312 298 Stags and boars 72 82 68 68 68 60 Cattle 2,930 3,220 3,082 3,057 2,967 2,807 Production Pork 1,299 1,503 1,438 1,574 1,609 1,516 Beef 2,082 2,308 2,212 2,171 2,089 1,988 Veal 24 26 26 27 27 26 Lamb and mutton 19 23 21 23 23 22 Cold storage stocks: 5/ Total pork 431.14 408.05 354.00 332.63 321.68 347.58 Hams 109.99 110.08 125.89 114.69 94.64 60.00 Pork belly 67.61 47.06 17.44 6.26 13.48 37.22 Ribs 28.75 23.65 20.84 27.10 33.10 49.75 Trim & other 134.43 130.50 119.55 111.98 117.62 126.88 Federal inspected: Hog weights live wt 256 253 252 255 259 260 dressed wt 185 183 182 185 188 188 ------------------------------------------------------------------------------ 1/ Omaha, Sioux City, Sioux Falls, So. St. Joseph, and So. St. Paul. 2/ 175 lb. carcass 3/ Classes esimated. 4/ End of month. 5/ Preliminary Meat supply, carcass weight 1/ ---------------------------------------------------------------- Production ---------------------- Begin- Year Commer- Total ning Im- Total cial stocks ports supply ---------------------------------------------------------------- Million pounds Beef: 1993 22,942 23,049 360 2,401 25,810 1994 I 5,745 5,783 529 681 6,993 II 6,042 6,058 562 602 7,222 III 6,377 6,393 506 586 7,485 IV 6,114 6,152 543 499 7,194 Year 24,278 24,386 529 2,368 27,283 1995 I 5,877 5,915 548 572 7,035 II 6,312 6,328 515 540 7,383 III 6,602 6,618 471 539 7,628 IV 2/ 6,250 6,288 464 399 7,151 Year 2/ 25,041 25,149 548 2,050 27,747 1996 I 2/ 6,125 6,163 475 500 7,138 II 2/ 6,425 6,441 500 540 7,481 III 2/ 6,775 6,791 450 540 7,781 IV 2/ 6,425 6,463 425 500 7,388 Year 2/ 25,750 25,858 475 2,080 28,413 Pork: 1993 17,030 17,088 385 740 18,213 1994 I 4,181 4,191 359 205 4,755 II 4,239 4,248 467 206 4,921 III 4,326 4,335 478 168 4,981 IV 4,912 4,922 419 164 5,505 Year 17,658 17,696 359 743 18,798 1995 I 4,488 4,498 438 173 5,109 II 4,394 4,403 495 167 5,065 III 4,240 4,249 498 154 4,901 IV 2/ 4,685 4,695 389 160 5,244 Year 2/ 17,807 17,845 438 654 18,937 1996 I 2/ 4,400 4,410 400 165 4,975 II 2/ 4,450 4,459 460 165 5,084 III 2/ 4,525 4,534 480 160 5,174 IV 2/ 4,950 4,960 420 160 5,540 Year 2/ 18,325 18,363 400 650 19,413 Veal: 1993 267 285 5 290 1994 I 71 74 4 78 II 68 70 4 74 III 68 70 5 75 IV 76 79 6 85 Year 283 293 4 297 1995 I 78 81 6 87 II 74 76 9 85 III 76 78 8 86 IV 2/ 79 82 7 89 Year 2/ 307 317 6 323 1996 I 2/ 79 82 6 88 II 2/ 76 78 6 84 III 2/ 77 79 6 85 IV 2/ 80 83 6 89 Year 2/ 312 322 6 328 Lamb: 1993 329 337 8 53 398 1994 I 86 87 8 13 108 II 79 80 11 14 105 III 66 67 12 11 90 IV 73 74 9 11 94 Year 304 308 8 49 365 1995 I 78 79 11 16 106 II 73 74 13 18 105 III 63 64 12 12 88 IV 2/ 69 70 7 12 89 Year 2/ 283 287 11 58 356 1996 I 2/ 68 69 10 14 93 II 2/ 65 66 8 14 88 III 2/ 63 64 10 12 86 IV 2/ 66 67 9 13 89 Year 2/ 262 266 10 53 329 Meat utilization, carcass and retail weight 1/ ---------------------------------------------------------------- Per capita Total Consumption Year Ex- Ending disap- Carcass Retail ports stocks pearance weight weight ---------------------------------------------------------------- Million pounds Pounds Beef: 1993 1,275 529 24,006 93.0 65.1 1994 I 359 562 6,072 23.4 16.2 II 391 506 6,325 24.3 16.9 III 416 543 6,526 25.0 17.4 IV 445 548 6,201 23.7 16.5 Year 1,611 548 25,124 96.4 67.0 1995 I 368 515 6,152 23.5 16.3 II 452 471 6,460 24.6 17.1 III 499 464 6,665 25.3 17.6 IV 2/ 531 475 6,145 23.3 16.2 Year 2/ 1,850 475 25,422 96.7 67.2 1996 I 2/ 450 500 6,188 23.4 16.3 II 2/ 535 450 6,496 24.5 17.0 III 2/ 560 425 6,796 25.6 17.8 IV 2/ 575 475 6,338 23.8 16.5 Year 2/ 2,120 475 25,818 97.3 67.6 Pork: 1993 435 359 17,419 67.5 52.4 1994 I 104 467 4,184 16.1 12.5 II 115 478 4,328 16.6 12.9 III 131 419 4,431 17.0 13.2 IV 181 438 4,886 18.7 14.5 Year 531 438 17,829 68.4 53.1 1995 I 187 495 4,427 16.9 13.1 II 194 498 4,373 16.6 12.9 III 199 389 4,313 16.4 12.7 IV 2/ 204 400 4,640 17.6 13.6 Year 2/ 784 400 17,753 67.5 52.3 1996 I 2/ 190 460 4,325 16.3 12.7 II 2/ 230 480 4,374 16.5 12.8 III 2/ 225 420 4,529 17.0 13.2 IV 2/ 255 400 4,885 18.3 14.2 Year 2/ 900 400 18,113 68.1 52.9 Veal: 1993 4 286 1.1 0.9 1994 I 4 74 0.3 0.2 II 5 69 0.3 0.2 III 6 69 0.3 0.2 IV 6 79 0.3 0.3 Year 6 291 1.2 0.9 1995 I 9 78 0.3 0.2 II 8 77 0.3 0.2 III 7 79 0.3 0.2 IV 2/ 6 83 0.3 0.3 Year 2/ 6 317 1.2 0.9 1996 I 2/ 6 82 0.3 0.3 II 2/ 6 78 0.3 0.2 III 2/ 6 79 0.3 0.2 IV 2/ 6 83 0.3 0.3 Year 2/ 6 322 1.2 1.0 Lamb: 1993 8 8 381 1.5 1.3 1994 I 2 11 95 0.4 0.3 II 3 12 90 0.3 0.3 III 2 9 79 0.3 0.3 IV 2 11 81 0.3 0.3 Year 9 11 345 1.3 1.2 1995 I 2 13 91 0.3 0.3 II 1 12 92 0.4 0.3 III 2 7 79 0.3 0.3 IV 2/ 2 10 77 0.3 0.3 Year 2/ 7 10 339 1.3 1.2 1996 I 2/ 2 8 83 0.3 0.3 II 2/ 2 10 76 0.3 0.3 III 2/ 2 9 75 0.3 0.3 IV 2/ 2 11 76 0.3 0.3 Year 2/ 8 11 310 1.2 1.2 ------------------------------------------------------------------------------ This file will be updated with October trade data by 9:00 A.M.on January 19, 1996. 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