Boerenbusiness Analysis
America heavyweight in pig market this summer
The US hog market rose to its highest level ever recorded in the last quarter of 2016. A new record is not yet forthcoming in the first count of 2017, but the figures are well above the level of March last year. The pig supply in the US will be crucial in the global market this summer.
USDA (US Department of Agriculture) officials counted a total of 71 million pigs. This is a plus of 4 percent compared to March 2016. However, it is a minus of 1 percent compared to December 2016. The sow herd is barely above 6 million pigs in March. That is a decrease of 1 percent compared to 3 months ago. However, with these figures the pig herd does set a record with regard to the earlier measurements from March.
31,4
million
a lot of growth
The pig supply in the United States is likely to remain ample in the coming months. The number of young pigs rose by 4 percent in the past quarter to 31,4 million. The number of sow litters has also increased by 3 percent. In addition, sow productivity in the American barns is still increasing. The number of piglets per litter increased from 10.30 to 10.43 piglets per sow. That's a record level.
Pig price 'stable'
Given the size of the pig herd, the supply puts some pressure on the pig price. However, the hog price in America (the Iowa/Minnesota listing) has exited the critical zone where the market dangled at the end of 2016. At the end of March, the selling price is $1,38 per kilo. In mid-November this was still 0,89 dollars per kilo.
In the meantime, in mid-February, the American pig price still touched $1,64. This revival was a result of the excellent export figures from America. The exported volume in January was 22 percent higher than in the same month last year. Mexico in particular is on the market.
Several slaughterhouses in America are under construction to process additional pigs. It is expected that, with the extra slaughter capacity, sufficient hooks will become available to accommodate the pigs that are ready for slaughter. Slaughter capacity is reportedly being expanded by 2 to 3 percent.
Massacres historically high
The number of slaughters in the US, in mid-March, is about 2,3 million. When pig prices hit historic lows in mid-November, slaughter records were reached of over 2,5 million. However, the pressure was somewhat relieved in the first months of this year. This also explains the better sentiment in the US pig market. The slaughter figures are, compared to March last year, 4 percent higher.
Many factors of influence
The mood in the US swine market in the coming months will depend on many interrelated factors. The number of slaughters in the spring usually decreases somewhat in the summer. That expectation also holds for the coming months.
However, if the number of slaughters remains above 2,2 million from the end of May, slaughterhouses still have their own challenges. Such is the expectation in America. Both domestic and foreign sales must then be in order.
Heavy offer
Domestic consumption is closely related to the price of cattle. In addition, the value of the dollar, which has been expensive for months, is also affecting exports. Even with the strong dollar, the American pig sector has proven in recent months that it can refute good export figures.
The most important factor is probably the offer. Given that there are still a lot of pigs in the pipeline, it will be an interesting summer in the US. If the pig price nevertheless drops due to too much supply, the effect will probably also be felt in Europe.
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Wouter Job
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