The document discusses the upcoming release of USDA reports on grain stocks and hogs/pigs. It provides analysts' estimates for the hogs/pigs report, which generally expect numbers to be near 100% of year-ago levels. It also notes that the EU ban on gestation stalls going into effect January 2013 could impact EU pork supplies but is not expected to cause large drops in US pork supplies. The document includes a chart showing that growth in US hog slaughter and pork production slowed well before recent drought impacts.

1. Vol. 10, No. 187 September 27, 2012
A reminder: CBOT Grain and Oilseed futures and options Pre-Report Estimates
trading floors will open at 7:20 a.m. Central on Friday, September
28 due to the release o f USDA’s Grain Stocks report at 8:30 a.m. September 28, 2012 Hogs and Pigs Report
Eastern time (7:30 a.m. Central time). For more information regard- Analysts Estimates
ing trading hours for CBOT Grains, Oilseed and Ethanol, click here. USDA Hogs & Pigs Report
USDA will also release its quarterly Hogs and Pigs Report September 28, 2012
on Friday. That report will be made public at 3:00 p.m. Eastern/2:00
Range Average
p.m. Central time. The results of DowJones Newswires’ pre-report sur- Inventories on Sept 1 (Pct. of September 1, 2011)
vey of analysts expectations for the key numbers in Friday’s report ap- All hogs and pigs 99.0 - 101.7 100.7
pear at right. In spite of the run-up for feed costs this summer, ana- Kept for breeding 98.5 - 100.8 99.9
lysts’ expect a “steady-as-she-goes” report with most numbers very
near 100% of year-ago levels. The only exceptions are the 180 lbs. Kept for market 99.0 - 101.9 100.8
and over inventory, farrowing intentions for the next two quarters and Under 50 lbs. 99.0 - 101.0 99.9
expected litter size for the June-August quarter. This lack of movement 50-119 lbs. 98.0 - 101.8 100.1
is symptomatic of the pork industry’s limited ability to respond quickly to 120-179 lbs. 99.0 - 102.9 100.8
cost shifts. It is also attributable, we think, to this cost increase being 180 lbs. and over 100.5 - 104.9 102.6
the result of a bad weather year whose impact will be more or less
erased if next year’s weather is normal. Maintaining productive capaci- Farrowings
ty through these difficult times may well be handsomely rewarded come Jun-Aug sows farrowed 98.7 - 100.1 99.2
2013. At least for now, producers appear to be doing just that. Sep-Nov Intentions 97.6 - 99.7 98.7
Several readers commented on the “pork and bacon Dec-Feb Intentions 97.3 - 100.3 98.4
shortage’ story via e-mail today, suggesting that we mention the
potential impact of the EU-wide ban on gestation stalls that goes June-Aug Pig Crop1 99.8 - 100.9 100.2
into effect January 1, 2013. According to a May 3, 2012 story on June-Aug pigs saved per litter 100.5 - 101.4 100.9
PorkNetwork.com, the UK, Sweden and Luxembourg banned stalls Source: DowJones Newswire
several years ago and are already 100% compliant with the new regs.
Another twelve EU countries say they will be compliant by January 1 U.S. HOG SLAUGHTER & PORK
and the remaining 12 are expected to be 70-90% compliant. PRODUCTION
The real questions are: “What happens to the pigs on farms Mil. Head Bil. lbs. carc. wt.
120 24
that are not compliant?” Will farms that still have pigs but are not com-
pliant be allowed to sell them? How many farms will just cease produc- Commercial Hog Slaughter
110 22
tion instead of converting to pen gestation? This last situation caused a Commercial Pork Production
100
great deal of havoc in France’s egg business this year when a substan- 20
tial portion of output disappeared quickly, leaving a gaping hole in egg 90
supplies and sharply higher egg prices for consumers. 18
The farminguk.com article that launched this “bacon shortage” 80
16
fervor did not mention gestation stalls but a policy issue like that is more 70
likely to cause a rapid change in output than even the short crops that 14
we have watched develop over several months. EU pork supplies may 60
fall pretty quickly next year but we — and apparently the analysts re- 50 12
sponding to DowJones’ survey — do not expect any large or sudden
drops in U.S. pork supplies. 40 10
1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006
And one more perspective on U.S. hog slaughter and pro-
duction. The chart at right shows annual figures for slaughter in mil-
lion head and production in billion pounds carcass weight. It is clear were primarily caused by circorvirus vaccines .
that the rapid and steady growth of the U.S. pork industry was stopped But it has been pretty much downhill from there with only a
well before drought set in late last year and the impact of that drought modest increase in both numbers in 2011 and, we think, again this year.
became evident this summer. 2008’s large increase in both of these Slaughter is on pace to gain 1% for the year. Weights are 0.4% higher
measures was due to a slight growth in the December 2007 (+2% yr/yr) YTD and that figure will get closer to year-ago levels through Q4 due to
and March 2008 (+1% yr/yr) breeding herds, nearly 2% growth in litter high feed costs. Tto get per capita supplies, you can knock another 1-
size from mid-2007 onward and HUGE improvements in pig survivability 1.5% off these numbers to account for growing exports and rising popu-
and growth rate. The last two and, perhaps, the increase in litter size lation. The drought is just the latest reason for lower pork availability.
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