March 29, 2011
 

US hog herd experiences minor increase

 

 

According to the USDA, as of March 1, the hog herd is at 63.964 million head, an increase of 0.7% from the previous year but the increment was mainly because of better herd management as more young pigs are surviving to maturity.

 

USDA put the breeding herd at 5.78 million head, up 0.5% from a year ago, and the market hog supply at nearly 58.185 million, up 0.7% from a year ago.

 

US hog producers are not expanding herds due to worries on high feed costs, according to analysts.

 

While all of those numbers were slightly higher than average trade estimates, analysts were reluctant to predict an end to the recent surge in hog prices because of this year's strong demand for hogs and pork. USDA forecasts US pork exports to be more than 10% this year.

 

Nearby hog futures are nearing record highs at the Chicago Mercantile Exchange and deferred contracts are even higher.

 

"It is slightly negative, if anyone cares," said an analyst.

 

Robust pork exports to Mexico, South Korea, Japan and others have had analysts and traders focused on demand rather than supply.

 

"I think cash fundamentals will rule the day and the expected increase in exports to Japan will outweigh any impact," said the second analyst.

 

High feed corn prices have discouraged expansion. Corn costs about US$6.80/bushel now and there are worries it could surpass US$7 or even US$8 should the 2011 corn crop be hurt by production problems.

 

"Hog producers are waiting for some signal that feed is going to be cheaper before adding any sows," said the third analyst.

 

He also noted that the report forecast a slight decline in pig litters this year versus 2010, which could mean fewer hogs and higher hog prices in 2012.

 

Chicago hog futures closed at a one month high on Friday at US$0.92475/pound and are near the record high for a lead contract of US$0.95 set in February.

 

"Numbers were just a little bit heavier than expected as far as upfront supplies. But we would not think this would impact Monday's trade at all," said the fourth analyst.