Extra Bearish Information for Hog Manufacturers, By means of Jason Franken Western Illinois College – Swineweb.com


The USDA’s March Hogs and Pigs file puts the March 1 stock of all hogs and pigs at 74.6 million head, down about 1.6% from closing quarter, and up about 0.6% from a yr in the past, in comparison to pre-report expectancies for simply 0.1% upper. The marketplace hog stock could also be about 0.8% better than a yr in the past, whilst the breeding herd, which was once anticipated to be down virtually 3%, is down simplest 2.1%. The selection of marketplace hogs weighing over 180 kilos is 0.6% less than on the similar time closing yr, whilst inventories are up 0.3% for the 120-179 weight magnificence against this to expectancies for a 1.0% lower, making inventories reasonably upper than anticipated for the 2 higher weight categories, whilst the 2 decrease weight categories are each up 1.5% from a yr in the past. Total, the selection of hogs weighing not up to 180 kilos is up simply 1.2% from this time closing yr, and those would be the marketplace hogs arriving at processing vegetation from April to August.

The rise in lighter weight hogs partially displays that December-February pig crop is up 1.9% from a yr in the past, in comparison to expectancies for a 1.4% building up, as a 2.6% lower in sows farrowed is once more greater than offset via productiveness beneficial properties with 11.53 pigs in keeping with clutter for the length or 4.6% greater than a yr in the past, in comparison to expectancies of simply 3.3% upper. Marketplace hogs from this pig crop will arrive at processors from June to August. Relative to precise farrowings closing yr, spring and summer season farrowing intentions are down via about 0.9% and 1.7%, respectively, which will have to indicate reasonably smaller slaughter numbers in next sessions, supplied diminished farrowings aren’t once more offset via beneficial properties in pigs in keeping with clutter.

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Chilly shares of meat seem to be again in a decline. Consistent with the USDA chilly garage file, chilly shares of red meat on the finish of February are down 1% from the former month and 12% from a yr in the past. Poultry shares are down 1% from the prior month and 5% from closing yr, whilst red meat is down 6% from the prior month and 12% from a yr in the past.

U.S. in keeping with capita red meat intake has been trending downward since 2019 with the USDA estimating it to backside out at 50.2 kilos in keeping with particular person in 2023 and forecasting it to upward push reasonably to 50.6 kilos in keeping with particular person in 2024.

Beef exports were a shiny spot with a surge in December of 2023 contributing to a file breaking yr. That was once adopted via 588 million kilos of red meat exported this January, or about 6% greater than in January closing yr. With Mexico once more main the best way, up 3.2% from a yr in the past and accounting for 40% of the ones shipments, western hemisphere international locations accounted for over part of U.S. red meat exports in January. With Japan coming in as the second one biggest purchaser at 15% of U.S. red meat exports and South Korea purchasing virtually 52% extra U.S. red meat than a yr in the past, Asia accounted for just about a 3rd of U.S. red meat exports in January, which displays fewer purchases of somewhat costlier EU red meat bothered via recently top power prices within the area. All through the week finishing March 21, red meat exports hit a advertising and marketing yr top, once more pushed via sturdy call for from Mexico, adopted via Japan and Australia.

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With the power of latest shipments, the USDA raised estimates of onest quarter red meat exports in 2024 via 30 million kilos to one.795 billion kilos or about 7.6% above closing yr, with 2nd, 3rd, and fourth quarters additionally anticipated to be about 1%, 6.6%, and four% upper than a yr in the past, respectively. Total, U.S. red meat exports in 2024 are expected to be 4.6% upper than in 2023.

Taking all of this under consideration, along side the USDA’s contemporary file of manufacturer intentions to plant 4.6 million fewer corn acres this spring and tighter than anticipated corn shares, the outlook is reasonably bearish for hog manufacturers in 2024. The forecast offered here’s for the nationwide weighted moderate internet worth on a carcass foundation for all transactions for producer-sold barrows and gilts, together with negotiated and contract costs. This internet worth will have to be extra reflective of what manufacturers obtain, on moderate, and in most cases runs at a top rate of about $2/cwt over the bottom worth on moderate. From December-February, this internet worth averaged $73.89/cwt in comparison to $54.64/cwt for the corresponding internet costs for negotiated or spot transactions.

On the whole, hog costs have a tendency to be upper within the 2nd and threerd quarters, with decrease costs within the 1st and fourth quarters. Accordingly, costs are forecast to upward push from the common of $73.36/cwt noticed within the 1st quarter of 2024 to $88.87/cwt and $93.72/cwt within the 2nd and threerd quarters, respectively, ahead of falling to $78.66/cwt for the general quarter of 2024 after which to $77.55/cwt for the 1st quarter of 2025. Those projections are in step with the provision and insist state of affairs recently expected. On the other hand, if precise farrowings exceed spring and summer season intentions indicated via this Hogs and Pigs file or if exports call for falters, then even decrease costs could also be discovered. Conversely, if manufacturers chorus from growth and exports keep growing, then costs may just enhance. Additionally, if discovered corn acreage grows from lately reported planting intentions and yields cling via dry sessions of a forecasted L. a. Nina, then feed prices would possibly reasonable, giving hog manufacturers some aid.

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