US quarterly hog report regarded as neutral-bearish

Analysts and traders regarded US government quarterly hogs and pigs report as neutral-bearish for Chicago Mercantile Exchange lean hogs on Thursday (Dec 31).

While some of the survey's results were in line with trade estimates, higher-than-expected pig crop and pigs per litter outcomes raised concerns about the fate of deferred lean hog contracts.

The US Department of Agriculture reported all hogs and pigs on December 1 at 98% of the year-earlier figure compared to analysts' average forecast of 97.6% and a range from 96.8% to 99.2%.

USDA pegged the kept for breeding category at 97% compared with the average of analysts' predictions of 96.6% and their projected range of 95.3% to 98%.

The federal government put hogs kept for marketing at 98% compared with the average estimate at 97.7%, ranging from 97% to 99.4%.

Livestock economist Ron Plain, characterised the report's overall tone as "a little bearish" based on the discouraging fall pig crop outcome that was higher than a year ago. He said the 2.1 percentage point pigs per litter increase that off-set the smaller breeding herd may be problematic for producers ahead.

Additionally, Plain pointed out that the two percentage point hog inventory dip, versus trade expectations for a 2.4 percentage point reduction, is a result that is heading in the right direction in terms of herd liquidation, but not as much as anticipated.