Inside Pigs
US pig price again in a negative spiral
The pig herd in the United States (US) has broken another record. The United States Department of Agriculture (USDA) counted 1% more pigs on June 3 than 1 year earlier. What does this mean for US pig prices?
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With the increase comes the size of the pig herd amounts to 73,5 million animals. There is also minimal growth (1%) compared to the count of the first quarter (March). In 1 year the number of breeding sows also increased; by 3% to 6,32 million animals. Compared to the March count, a growth of 2% is visible.
Between the months of March and June, 3,12 million sows were pregnant. The number of live piglets born per litter averaged 10,63, compared to 10,55 in the same period in 2017.
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Record number of piglets
The number of piglets grew the fastest in 1 year. The USDA recorded 33,2 million piglets at the beginning of June, a growth of 4%. Since the American ministry started keeping count, the piglet herd has never recorded such numbers. The USDA expects the number of pregnant sows to rise to 3,17 million between June and September. This, in combination with a record number of piglets, means that there is still the necessary supply in the pipeline.
The growing pig population requires additional slaughter capacity. In recent years, various slaughterhouses have increased capacity. This means that a record number of pigs does not necessarily have to put pressure on prices; This is also evident from the rising pork price of the past months. Although this increase is inherent to the seasonal pattern on the American pig market.
Pig prices are falling again
However, additional slaughter also means more meat production for which a market must be found. Due to the import duties of China en Mexico it won't get any easier. The trade war is expected to put pressure on US pork prices in the coming quarter. The turnaround on the pig market took place last week; for example, the Iowa/Minnesota quotation fell in recent days from $1,84 per kilo to $1,70 per kilo.
Historically, the Iowa/Minnesota price peaks in mid-June and then continues to trend downward until November. There is often a short recovery in between (in September), mainly supported by domestic demand. Given the number of pigs and the imposed trade tariffs, a similar scenario is in place for this year and the pig price appears to be on its way to (significantly) lower levels. The predictive effect of the American pig futures market also indicates a downward trend.