Pork Profit Maximizer – Foodservice Edition

September, 30, 2019

Coming into the report analysts were expecting the total inventory of market hogs as of September 1 to be 3% higher than a year ago. USDA reported the inventory of market hogs at 71.248 million head, 2.442 million head or 3.5% higher than a year ago.

This is 377k head more than the average of analyst estimates. The higher inventory should not come as a big surprise, however. In the June report USDA noted that the pig crop for Mar-May was estimated to be 3.7% higher than a year ago, implying a +3.5% growth in inventory come September.

The USDA survey pegged the inventory of hogs weighing over 180 pounds at 12.969 million head, 779,000 head or 6.4% higher than a year ago. This estimate is far higher than what analysts were expecting and will likely be viewed as negative for hog prices in the near term. Currently October futures hold a $10 premium vs. CME index values.

Hog slaughter in the last four weeks has been significantly higher than a year ago but consistent with the inventory survey that USDA published. Total hog slaughter since September 1 has been 10.050 million head, 614k head or 6.5% higher than last year. If USDA is correct, we should expect hog slaughter to be above 2.6 million head for the next couple of weeks.

The inventory of hogs between 120-179 pounds was estimated at 14.814 million head, 748k head or 5.3% higher than a year ago. This inventory level was also far higher than the 3.4% analysts were expecting, suggesting a significant increase in hog slaughter during mid-October and mid to late November.

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