The latest Quarterly Hogs and Pigs report from the USDA, as analysed by the Daily Livestock Report (DLR), has closely matched market predictions. The report indicates a sustained increase in sow productivity, with a nearly 4% rise in pigs saved per litter over the last three quarters.
However, in a strategic move, producers have slowed down productivity gains by reducing sow farrowing, which saw a 4% decline in the September to November quarter.
Farrowing intentions for the upcoming December to February and March to May periods are also projected to decrease by 1%. In the short term, market hogs ready for market or nearing market readiness have seen a 2.4% increase from 2022. Excluding the heavy-weight categories, the number of market hogs in the pipeline remains similar to last year’s figures.
A significant increase in sow slaughter, up 8.4% for June to August and estimated to be 3% higher for September to November, reflects ongoing challenges in the hog industry. These challenges are largely attributed to persistent negative returns throughout the year.
Despite the high productivity of sows, hog supplies have not been reduced sufficiently to elevate prices above break-even levels.
The DLR report also highlights the market’s adjustments in response to Proposition 12 (Prop 12), which is set for full enforcement from January 1, 2024. Prop 12 mandates that all pork sold in California must come from sows housed with a minimum of 24 square feet of space. As most U.S.-produced pork does not meet this criterion, further market challenges are expected.
According to the DLR, if negative returns continue, sow liquidation may persist. However, the current elevated levels of productivity could potentially prolong this phase.
