Market News & Headlines >> Hog Market Shrugs Off Bearish USDA Data

For now, the hog market seems to have largely shaken off what appeared to be a solidly bearish USDA quarterly Hogs and Pigs report that pegged the U.S. hog herd comfortably above the range of trade expectations.

However, lean hog futures are looking high priced compared to USDA’s 2017 price projections and the large supply estimates only reinforce that perception.

USDA pegged the overall U.S. hog herd as of Dec. 1 at a record 71.5 million head, 103.7% of  a year earlier, compared with  trade estimates that averaged 101.7% of a year earlier in a range from 100.7%-102.3%, according to a survey of nine analysts by Reuters News Service. The market hog inventory was put by USDA at 104.0% of a year earlier, easily topping trade expectations that averaged 102.0% in a range from 100.8%-102.5%. USDA’s breeding herd estimate was 101.5% of a year earlier, above trade estimates that averaged 100.2% in a range from 99.8%-100.6%.

The larger-than-expected increase in the U.S. hog herd was resulted from a combination of a larger-than-expected September-November pig crop and upward revisions to the USDA’s Sept. 1 inventory numbers.USDA pegged September-November pig crop at 32.333 million head or 104.8% of a year earlier, compared with pre-report expectations that averaged 101.5% of a year earlier in a range from 100.9%-102.1%.  September-November sow farrowings were 103.9% of a year earlier, versus trade expectations that averaged 100.4%, while the number of pigs per litter came in at 100.9% of a year earlier against trade estimates slightly below the average of trade estimates at 101.1%. 

The market hog inventory suggests that year-over-year hog supply increases will grow larger as the first quarter of 2017 moves along. Supplies of market hogs weighing 180 lbs or more on Dec. 1 were up 2.5% over last year, while hogs weighing 120-179 lbs. were up 4.0% and hogs weighing 50-119 lbs. were up 4.5%, with hogs weighing less than 50 lbs. up 4.3%.