Market News & Headlines >> Hog Market Reacts Positively to USDA Data
Last Thursday’s quarterly USDA Hogs and Pigs report held no large surprises for the hog market, confirming continued moderate herd expansion, and has received a positive reception from the market, with hog futures rallying on Friday and again on Monday.
USDA pegged all hogs and pigs as of Sept. 1 at 102.5% of a year earlier, right on the average of trade estimates and put the size of the breeding herd at 101.2% of a year earlier also dead on the average of pre-report estimates. The Sept 1 market hog inventory, at 102.6% topped the average of trade estimates by a mere tenth of a percentage point.
The June-August pig crop was pegged by USDA at 102.2% of a year earlier, versus trade estimates that averaged 101.9% as June-August farrowings came at 101.5% of a year earlier, toward the high end of trade estimates that averaged 100.9% in a range from 100.2%-102.0%. The number of pigs per litter, at 101.7% of a year earlier, matched the average of trade expectations.
The weight breakdown of market hogs was a bit different than the trade expected, with the supply of hogs in the heavier weight categories – over 180 pounds and 120-179 pounds – coming in at 103.9% of a year earlier and the supply of hogs in the 50-119 pound and under-50-pounds categories at 100.7-100.8%. The weight breakdowns and increases to U.S. slaughter capacity have helped push December 2017 lean hog futures premium to cash and kept them surging on a spread basis versus the nearby October futures contract.
Producers’ December-February farrowing intentions were reported by USDA at 101.3% of a year earlier versus trade expectations that averaged 100.0%. This does imply larger-than-expected supplies of market hogs next summer, but that has not stopped June lean hog futures from rallying to a new contract high.