As September dawns, it behooves us to consider the factors that will likely have major impacts on fall hog markets. Those, of course, all fit one way or another into the economist’s pat answer of,“Supply and demand,” but some details will probably be far more illuminating and, hopefully, satisfying.
There was an unusual amount of variation in forecasts for fourth quarter slaughter coming out of the June Hogs and Pigs report. Ron Plain and Scott Brown at Mizzou had +1.3% from Q4-2012. Lee Shulz at Iowa State University (ISU) forecast it at +1.1% and Jim Robb and the staff of the Livestock Marketing Information Center in Denver said slaughter would be up 1.6%. Meanwhile, I said DOWN 0.5%. Our forecasts for the current (third) quarter were similarly disparate with the other three up 1.6 to 2.1% and me down 1.5%. Through July and August, FI slaughter this year is almost precisely the same as last year. So far we’re all wrong. That raises your confidence level, doesn’t it?
None of this provides the reader with a lot of guidance, but I do offer the past two weeks as support for my view that slaughter numbers will be tighter in Q4 (See Figure 1). The biggest reason for my lower forecasts was the strange weekly slaughter pattern that extreme heat and extreme feed prices caused last year.
The far more difficult job is to predict what producers, in fact, might do this year. I went back to the historical pattern and, at least until last week, the weather and feed costs had supported that conclusion. Weekly slaughter totals for the past two weeks have been sharply lower than last year’s “get-those-feed-eating-critters-out-the-door” surge. I suspect that will be the case for most of September as well. Actual 2013 slaughter has differed from my predicted levels in Figure 1 by only 0.06% (14,800 out of 26.435 million head) since June 1.