The hog industry could see some major changes in the upcoming months, depending on the effect of severe drought on U.S. corn and soybean crops, according to David Newman, the North Dakota State University Extension Service's swine specialist.
The U.S. Department of Agriculture's weekly corn and soybean progress report, released July 2, indicated that the condition of those crops dropped by 8 percentage points.
This is a significant decrease so early in the growing season, with only 48 percent of corn in 'good to excellent' condition, compared with 56 percent just last week, Newman says.
This is not a good sign, he adds. Crop conditions this bad now could indicate that a large portion of the corn and soybean crops will not reach harvest.
Corn and soybeans are major feed for swine. The demand for those feedstuffs already is high, so a smaller-than-expected harvest could lead to even higher prices for corn and soybean meal this fall.
In North Dakota and Minnesota, crop conditions are better, but that is not a big relief to swine producers, considering the bulk of the feedstuffs that are required for swine diets are grown in the central Midwestern states, Newman says. The hot weather and drought there will continue to have negative effects on the crop conditions without much relief in sight.
The USDA's latest quarterly hogs and pigs report indicates the U.S.'s hog and pig inventory is up 1 percent from a year ago, at 65.8 million head. The breeding inventory also is up 1 percent, at about 5.86 million head.
Nationwide, pigs per litter on the second quarter farrowings for 2012 were an impressive 10.09, a trend that keeps going up and represents producers' ability to keep more pigs alive in the farrowing room, Newman says. This is especially true for the large sow farms with more than 5,000 head.
North Dakota has a large inventory of sows that produce weaned piglets and has very similar positive trends in pig/sow/litter numbers.
The report also shows that U.S. producers intend to have fewer sows farrow during the current quarter, or about 2.9 million head. This is down 1 percent from 2011. Furthermore, intended farrowings are down 1 percent from 2011 for the next quarter (September-November).
Luckily, we are not seeing a huge surge in the breeding inventory, Newman says. Although it was up 1 percent, it is not as high as some had predicted. Large expansion would mean a huge supply of pigs with the possibility of limited feedstuffs in the later quarters of 2012. Tight feedstuffs will play the major role in determining producer profitability.
He recommends producers put an increased emphasis on managing their input and operational costs.
Risk management will be important for pork producers in the current market situation, he says.