The recent hog and pigs report released by the United States Department of Agriculture shows that the U.S. hog inventory is up two per cent. In the case of the U.S. hog industry, an industry that is so huge, a small change in numbers can cause a major market shift in market prices. When the producers who raise that commodity in question are struggling to make a profit, the shift can have even a bigger effect.

The United States inventory of all hogs and pigs on June 1, 2016 stands at 68.4 million head. This is up two per cent from June 1, 2015, and up one per cent from March 1, 2016. This is the highest June 1 inventory of all hogs and pigs since estimates began in 1964.

The breeding inventory, at 5.98 million head, is up one per cent from last year, but down slightly from the previous quarter.

The Market hog inventory, at 62.4 million head, is up two per cent from last year, and up one per cent from last quarter. This is the highest June 1 market hog inventory since estimates began in 1964.

The March to May 2016 pig crop, at 30.3 million head, is up three per cent from 2015. This is the largest March to May pig crop since 1971. Sows farrowed during this period totaled 2.90 million head, up one per cent from 2015. The sows farrowed during this quarter represented 48 per cent of the breeding herd. The average pigs saved per litter was a record high 10.48 for the March to May period, compared to 10.37 last year. Pigs saved per litter by size of operation ranged from 8.10 for operations with 1 to 99 hogs and pigs to 10.50 for operations with more than 5,000 hogs and pigs.

United States hog producers intend to have 2.95 million sows farrow during the June to August 2016 quarter, down two per cent from the actual farrowings during the same period in 2015, and down one per cent from 2014. Intended farrowings for September to November 2016, at 2.90 million sows, are down one per cent from 2015, and down three per cent from 2014.

Here is an interesting number, the total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 47 per cent of the total United States hog inventory, up from 46 per cent last year.

Tyler Fulton, the director of risk management with h@ms Marketing Services says export demand will play a key role in offsetting higher than expected October to November U.S. slaughter numbers referring to the USDA quarterly hogs and pigs report.

Fulton says numbers were pretty much on line with expectations with the exception of the pig crop number, the hogs expected to go to slaughter from October through November.

“Demand is really playing a critical role to offset some of this negative supply related news,” he said. “There’s been a lot of talk about China in the summer’s market believing that maybe they might buy significantly larger quantities than what they have in the last couple of years.”

That is because China is currently short of pork and prices are quite lucrative to move North American pork into that market but it doesn’t always work cleanly. The problem being, North America actually does not have a significant market share in that county, but Europe does.

“Europe is probably better positioned to take advantage of the current economics in China,” said Fulton. “I think there’s generally an expectation that we can expect to see significant improvement in exports to China.”

The question is will the increases in volume to China result in a net export increase because of the two biggest U.S. markets, Japan and Mexico, are showing some weakness in imports. Looking at those numbers in the U.S., Fulton says will the increase in China be enough to offset the increase in supply anticipated in the fourth quarter. •

— By Harry Siemens