US hog supply unlikely to shrink for the short term

 

 

Market analysts expect the USDA's upcoming quarterly hogs and pig report to indicate continued supply increases in the months ahead and more adjustments by the USDA to prior data to reflect larger-than-expected hog kills in recent months.

 

The USDA's quarterly hog figures are scheduled for release on Friday at 3 p.m. EDT (1900 GMT). 

 

Independent market analyst Bob Brown suspects the federal government's data will continue to show record high hog inventories. Brown offered a 4 percen year-over-year market hog-increase estimate and a 0.7 percent breeding-herd-inventory-reduction forecast. 

 

Brown said it would take time for larger supplies to deflate, he said. Since the March-May pig crop will be the highest since 1980, it looks like hog slaughters will remain at record high levels at least through the summer, he added.  

 

Ron Plain, a University of Missouri livestock economist, expects the USDA to upwardly revise some of its previous report numbers to account for increased swine slaughter in recent months. The USDA's March report underestimated the number of hogs in the country, which means some revisions should appear in the June survey, he said. 

 

Plain said potential "good news" regarding Friday's USDA data is that the breeding-herd and farrowing intentions could drop below levels a year ago, meaning higher cash hog prices for 2009. 

 

Unfortunately, said Plain, judging by the heavy-weight hog category there remains a significant number of larger hogs yet to be processed this year, which does not bode well for prices.

 

Market analysts and economists cite several reasons for the glut of pork in the US, including an influx of Canadian hog imports and the circo-virus vaccine last year that saved more pigs than expected. 

 

Wachovia Securities' analyst Dan Vaught foresees about a 1-percent increase in spring farrowings after the March hog report implied a 0.46 percent sow-farrowing intention.

 

Vaught said producers would not have cut back production quite as aggressively since the USDA's winter farrowings result was larger than the year-ago total by 6 percent. 

 

Back in winter, feed and swine prices were even more attractive than it is now so there would not have been a massive cutback, Vaught said

Vaught said the farrowing figure and long-term upward trend in litter sizes would mean the pig crop would grow 2 percent this season.

 

Hog producers who encountered skyrocketing feed costs last spring began to vigorously curtail output during the spring as evidenced by the substantial rise in spring sow slaughter, said Vaught. Still, he puts the breeding-herd figure at 99 percent of a year-ago June total because producers may not have cut back output as aggressively prior to June 1.