Concerns about meat shortages in recent months amid the coronavirus pandemic eased Thursday as USDA’s hogs and pigs report indicates a record inventory.
The main concern moving forward remains a backlog of animals and ongoing downward pressure on hog prices that could last through 2020.
“As I looked over the numbers (in the quarterly report), it’s hard to find too many things on the positive side,” Scott Brown, associate extension professor at the University of Missouri, said during a teleconference hosted by the National Pork Board. “We have a lot of hogs left to deal with. It’s not a lot of help for prices on the supply side.”
USDA estimates the inventory of all hogs and pigs as of June 1 at 79.6 million head, up 5.2% from last year and well above the pre-report estimate.
The market hog inventory (73.3 million head) measured 5.8% above last year and also exceeded pre-report estimates.
“We know we have large numbers of hogs coming and we have fixed (slaughter) capacity,” said Lee Schulz, Iowa State University associate professor.
“The number that really stuck out to me was March-May farrowings (3.17 million head), 2.4% higher than pre-report expectations,” he noted. “So even though we saw the number of pigs saved per litter similar to last year (a record 11.1 compared to 11 last year), we saw larger farrowings that gave us a much bigger pig crop.”
And, with an estimated 3.4 million hogs backed up in the system due to coronavirus-related temporary packing plant closures and slowdowns the past few months, a huge supply and capacity issues could hang over the market through the year.
Brown estimates quarterly national base live hog prices of just $40 per hundredweight in the second and third quarters and $37 in the fourth quarter while Schulz estimates the Iowa/Minnesota carcass price to average just $55 for the year.
“We have a very heavy run (of hogs) ahead of us in the fall,” said David Miller, chief economist for Decision Innovation Solutions. “We’re going to stay under price pressure, possibly 20 to 25% under year-ago levels.”
In Illinois, all hogs and pigs totaled 5.5 million head as of June 1, up 2% from March and up 3% from last year. The state’s breeding inventory decreased by 20,000 head from a year ago to 570,000 head while the market hog inventory (4.93 million head) jumped 4% from last year.
One key impact of the backlog of hogs showed up in heavier animal weights as farmers hold them longer on farms. The number of market hogs and pigs in the 120-179 pound category increased 11.8% last quarter while those above 180 pounds increased 12.8% from last year.
“It’s a reminder that a lot of hogs are coming to market the remainder of 2020,” Brown said. “It’s going to create a lot of challenges for us.”
Miller estimates about 2.1 million head of hogs disappeared from the count last quarter as many animals were moved into custom slaughter plants while others were euthanized.
“We know a lot of custom plants are running full bore,” he added.
Farmers intend to farrow 5% fewer sows each of the next two quarters in response to the backlog of animals.