US HOG INVENTORY UP - PRICES DOWN

The USDA Hogs & Pigs report (released December 29) placed the December 1 total hog inventory at 59.9 million head, 107 percent of 1996's. The report estimated the breeding inventory was 105 percent of 1996's and the total market hog inventory was 107 percent of 1996's. Pre-report estimates placed all three categories between 104 and 108 percent of year ago numbers.

Farrowings continue to raise questions. The September through November farrowings were 108 percent of 1996's and the December through February expectations are 109 percent of 1997's. These seem somewhat large with the breeding herd up a comparatively small 5 percent from 1996's.

The number of market hogs indicate that slaughter throughout 1998 should be larger than 1997. Market hogs weighing less than 60 pounds were 108 percent of 1996's; weighing between 60 and 119 pounds were 107 percent of 1996's; and weighing between 120 and 179 pounds were 106 percent of 1996's. All of these estimates were within the range of the pre-report estimates. USDA estimated the number of market hogs weighing 180 pounds and over were 107 percent of 1996's. This was larger than any of the pre-report estimates but smaller than recent slaughter might suggest. However, increased imports from Canada may explain some of the slaughter difference.

Recent trends indicate that the current expansion might be slowing. Hog prices were in the mid-$40 to $60 dollar range through most of 1996 and 1997. With export growth expected to slow and U.S. pork production expected to grow, prices will probably be lower in 1998 than 1997 or 1996. In December, prices fell into the $30 range. Producers seem to already recognize the market conditions with the March to May farrowing intentions at 103 percent of 1997's, a much slower pace than recent farrowings.

1998 MEAT CONSUMPTION

The larger total hog population indicates that there will be more hogs slaughtered in the U.S. in 1998 than in 1997. Currently, forecasts indicate hog slaughter in 1998 should be 6 to 9 percent larger than 1997. Hog weights also should increase in 1998 over 1997. Heavier weights and larger slaughter numbers would place pork production 7 to 10 percent larger than 1997 and at a record large volume.

At the same time, the cow herd declined during 1996 and 1997. This will reduce the number of cattle available for slaughter. Cattle dressed weights should increase, but beef production will still be 2 to 4 percent smaller than 1997 in 1998.

Poultry production also will increase, but at a slower rate than in recent years. Overall, expected poultry production is between 3 and 6 percent larger than 1997.

Net meat exports should remain steady to grow in 1997. Although trouble in the Asian economy may slow meat exports to that region, exports to other areas, such as Mexico, should increase.

Assuming a normal to slightly larger carry-over, these factors add together to a total meat consumption of 71.4 to 72.5 billion pounds in 1998, a record large amount. At the same time, the U.S. population trend indicates a 1 percent growth in the number of people in the U.S. This translates into per capita meat consumption of 264.3 to 268.2 pounds on a carcass weight basis. On a retail weight basis, per capita consumption would be between 209.5 and 212.6 pounds. The largest annual per capita meat consumption was 266.0 pounds on a carcass weight basis and 211.0 pounds on a retail weight basis in 1994.

(John McKissick - Extension Economist- Livestock, February 1998)

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