Nearly all of the hog inventory numbers in the latest USDA Hogs and Pigs report broke records for March, but a slight drop in farrowing intentions offers some hope.

“This is an interesting report and probably one of the most significant we’ve seen in a few years,” observes Daniel Bluntzer, director of research for Frontier Risk Management, Corpus Christi, TX, a participant in a recent pork checkoff-sponsored media teleconference.

The inventory of all U.S. hogs and pigs on March 1, 2008 of 65.9 million head was up 7% from the previous year. The 6.14 million-head breeding inventory rose less than 1% from last year, but was down slightly from the previous quarter.

The market hog inventory, at 59.8 million head, was up 7% from last year, but down 2% from last quarter.
“We’re looking at no void in market supplies through at least Labor Day of 2008,” says Bluntzer.

The December-February pig crop, estimated at 28.1 million head, was up 6% from 2007. Intentions are for 3.05 million sows to farrow in the March-May quarter, up slightly from actual farrowings for the same period in 2007.

However, farrowing intentions for June-August 2008, at 3.04 million sows, are down 2% from last year.

“We’re starting to see some response, although it’s pretty slow and pretty small,” reports James Mintert, agricultural economist at Kansas State University.

As expansion slows in the U.S. pork industry, supplies might tighten by the fourth quarter of 2008, says John Nalivka, president of Sterling Marketing in Vale, OR.

Meanwhile, larger cattle numbers and increased poultry production are creating large supplies of competing animal protein.

“I think it will be 2009 before this slows down,” adds Mintert. He’s projecting second-quarter prices (based on the national weighted average base prices) at $59-60; third-quarter prices in the high $50s to low $60s; and fourth-quarter prices averaging in the low $50s.

“On the positive side, agricultural exports continue to benefit from the weak U.S. dollar. Without a doubt, pork exports are helping the industry immensely,” says Bluntzer, noting a significant increase in U.S. pork sales to China.