Market News & Headlines >> Hog Herd Largest Since 2008

 Friday afternoon’s quarterly USDA Hogs and Pigs report was bearish for prices in the near-term, but bullish for the long term as it showed a larger-than-expected June 1 inventory of market hogs, but indicated producers do not intend to expand their herd further this summer and fall.

USDA pegged all hogs and pigs as of June 1 at 8.7% above a year earlier compared with trade estimates that averaged 7.8% larger in a range from 6.2-9.0% larger. In actual numbers, the total U.S. hog herd was 66.90 million head, the largest since 2008.

The June 1 market hog inventory came in 9.4% larger than a year earlier vs. trade estimates that averaged 8.6% larger in a range from 6.6-10.8% larger. The inventory of hogs weighing 180 lbs. or more was up a hefty 13.4% from last year, which explains recent big slaughters. Hogs weighing 120-179 lbs. were up 111.5%, which suggests double-digit increases in slaughter over last year will continue in the first half of the third quarter.

On the supportive side, the breeding herd was pegged by USDA at 1.2% larger than a year earlier vs. expectations averaging 2.0% larger in a range from 1.3-2.6%. Both June-August and September-November farrowing intentions were on the low side of expectations. June-August intentions were down 2.5% from a year earlier, vs. trade expectations averaging 2.2% lower. September-November intentions were down 4.3% from a year earlier and were below all trade estimates.

Hogs weighing 180 lbs. or more were up a whopping 13.4% from last year, which explains recent big slaughters. Hogs weighing 120-179 lbs. were up 111.5%, which suggests double-digit increases in slaughter over last year will continue in the first half of the third quarter. The question is whether the bearish news has already been factored into front-end futures.