U.S. Hog Producers Expanding
Friday’s USDA Quarterly All Hogs and Pigs Report held slightly negative news for the hog market as it indicated the U.S. hog industry intends to expand production modestly in coming months.
Most analysts had expected that the report would show a slight contraction in breeding herd numbers; however, USDA pegged the breeding herd at 101% of a year earlier, matching the top end of the range of pre-report estimates, which averaged 99.4%. It seems likely that profitable summer hog prices, combined with the downturn in feed costs since last spring encouraged producers to expand.
The total U.S. hog herd as of Sept. 1 was also pegged at 101% of a year earlier, versus estimates averaging 100.5% in a range from 98.5% to 102%. The inventory of market hogs also came in at 101%, vs. trade estimates averaging 100.6%.
USDA pegged the number of market hogs weighing 180 pounds or more at 105% of a year earlier, topping the range of expectations and confirming ample near-term hog supplies.
However, USDA reported the number of market hogs in the 60- to 119-pound and 120-179-pound weight classes at only 99% of a year earlier. That estimate was at the low end of the range of expectations and suggests that supplies may not be as large during the fourth quarter of 2004 as has been previously anticipated.
The evidence of expansion is likely to weigh most heavily on deferred futures contracts. December lean hog futures may find some support from the market hog inventory breakdown.
Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.
To see more market perspectives, visit Brock's Web site at www.brockreport.com.