March 29, 2007

Rising feed costs loom over growing US hog numbers
 

Despite an increase in US hog numbers following a profitable year in 2006, rising feed costs might dampen profits and hence future growth, livestock analysts said.

Ron Plain, a livestock economist at the University of Missouri, said the upsurge in corn prices has stopped growth of the breeding herd. While the US sow herd as of Dec 1 only increased by 1.3 percent from the same period in 2005, domestic sow slaughter from December to February was up 5.3 percent on-year, he added.

With corn demand for ethanol production on the rise, US corn prices have shot up to record levels this year.

A survey by Reuters revealed that analysts on average expect the US hog herd as of Mar 1 at 101.5 percent of a year ago. Estimates for breeding herd numbers and market hog supply averaged 100.4 percent and 101.7 percent respectively.

Analysts said the marginal increase likely indicates a further slowdown in any expansion, adding that imports from Canada are expected to push up hog numbers in the lighter weight category.

The USDA is set to release its quarterly Hogs and Pigs report this Friday, giving details of the breeding herd size and the supply of hogs available for market release.