By DOUG SCHMITZ

Iowa Correspondent

DES MOINES, Iowa — June’s hog numbers were the highest June 1 inventory since estimates began in 1964, at 75.5 million head, up 4 percent from June 2018 and 1 percent from March 1 this year, according to the June 1 USDA quarterly Hogs & Pigs report.

Released June 27, it said U.S. breeding inventory, at 6.41 million, was up 1 percent both from last year and from the previous quarter. The report also said market hog inventory, at 69.1 million, was up 4 percent from last year (analysts expected this number to be at 3.1 percent) and 1 percent over last quarter.

Lee Schulz, Iowa State University associate professor of agricultural economics, said the 7.5 percent increase in the number of pigs in the 180-pound-and-over category was 3 percent higher than pre-report expectations, compared to last June’s numbers.

“The December 2018 to February 2019 pig crop was increased 1.3 percent from the previous report; that’s about 428,000 pigs more. And that came about because of more sows farrowing,” he explained.

“That collectively contributed to a lot larger 180 pound-and-over (category). I think that very much matches the 9 percent increase in slaughter we’ve seen here in November. We are now accounting for those hogs.”

Schulz joined Dale Durchholz, principal at Grain Cycles, and Scott Brown, University of Missouri extension agricultural economist, to analyze the report in a recent teleconference.

According to Allendale, Inc., average estimates forecast by analysts showed all June 1 hogs at 103.6 percent (103 percent average estimate); those kept for breeding at 101.4 percent (102.1 average estimate); and kept for marketing at 103.9 percent (103.1 average estimate).

The report said the March-May 2019 pig crop, at 34.2 million, was up 4 percent from 2018, the largest March-May pig crop since those estimates began in 1970. Sows farrowed during this period totaled 3.11 million, up slightly from 2018.

While these sows during this quarter represented 49 percent of the breeding herd, the report said the average pigs saved per litter hit a record high 11 for the same period, compared to 10.63 last year.

“When you look at Indiana, Kansas, Minnesota, Missouri, North Carolina, Pennsylvania, Texas, all with growth in excess of 4/10ths of a pig, relative to the year ago, it certainly suggests to me that some of the disease issues that we’ve seen in the industry are becoming better-controlled – PRRS (porcine reproductive and respiratory syndrome) being one that sticks out,” Brown said.

“If we continue to see pigs running at these kinds of growth rates going forward, it spells certainly more hogs as we go through time.”

The report said hog producers intend to have 3.18 million sows farrow during the June-August quarter, down slightly from actual farrowing during the same period in 2018 but up 3 percent from 2017. Intended farrowings for September-November, at 3.17 million, are up slightly from 2018 and 2 percent from 2017.

Of the 75.5 million hogs and pigs, 69.1 million were market, while 6.41 million were kept for breeding. Between March-May 2019, 34.2 million pigs were weaned on U.S. farms, up 4 percent from March-May 2018.

As the nation’s leading hog producer, Iowa accounted for the largest June 1 inventory at 23.7 million, up 5 percent from last June and a record high June 1 inventory. North Carolina had the second-largest with 9.2 million, and Minnesota the third, with 8.7 million.

Analysts said one big surprise in the report was the breeding inventory on a state-by-state basis, which showed Iowa hog numbers down 40,000, and Minnesota and North Carolina also showing lower numbers.

“But those declines are being outweighed by what happened in states like Illinois, Missouri, Nebraska, South Dakota,” Brown noted. “And the other state category was also up 25,000 head. To me, that could suggest some increasing growth ahead.”

But Schulz said, “We’ve lost about $11 per cwt. (so far this year) – that is almost $25 per head. Given the size of the breeding herd and expectations of fewer farrowing intentions, I don’t know how much lower we can go just given the size of that breeding herd.”

In Illinois, total June 1 inventory of all hogs and pigs was 5.3 million, up 1 percent from March 1 but down 1 percent from last June. In Indiana, total inventory was estimated at 4.25 million, up 300,000 from a year ago.

In Michigan, total inventory was estimated at 1.25 million, up 50,000 from a year ago. Ohio’s total inventory was estimated at 2.73 million, up 80,000.

According to the national direct carcass base price, Brown forecast lean hog prices at $76.50 in the third quarter and $69.50 in the fourth quarter. Schulz predicted third-quarter prices at $74-$78 and fourth-quarter prices at $70-$74, based on the Iowa-Minnesota total.

Looking to futures, Durchholz said there would be much uncertainty with grain going forward through the entire growing season. “You know it’s going to shed some uncertainty out here on what kind of pork production we might really have going forward.”

Brown said that’s what gets difficult when talking about expectations of price outlook under that kind of uncertainty – especially given external factors like African swine fever (ASF).

“We don’t need any hiccups on the demand side, as best we can help, especially the domestic demand, if we want to keep prices at reasonable levels,” he said.

Schulz said, however, the export market has been “very robust” when looking at the weekly data. “When you combine the outstanding sales plus the accumulated exports, it’s up 28 percent year-over-year, so it really shows that demand is very strong so far this year,” he added.

With China’s questionable reporting of ASF hog losses, however, the analysts said it makes it difficult to forecast how the country will move forward, despite being able to store frozen pork.

“That has built up some large cold-storage stocks,” said Steve Meyer of Kerns and Associates, who initially summarized the report. “It’s also been a surprise the past couple of months the cold-storage capabilities of China seem to be larger than what anybody really thought they were.”

Durchholz said, “We could see the whole flow of pork in the world change, not just because of ASF but also the political repercussions the Chinese have both here in the U.S. and Canada, and some others, as well.”