Thursday’s USDA Quarterly Hogs and Pigs report was called very bearish to the futures market, especially for the fall and early 2019 delivery months. Prices could open and lock down the daily limit of $2.00 per cwt.
Jul futures could be pressured on the open Friday, but packer buying interest may lift it before the close, market analysts said.
The report also could drag on live cattle futures on the prospect of more competing meat in the market.
KEPT FOR BREEDING A SURPRISE
The report generally was in line with pre-release estimates except the “kept for breeding” category, which, at 6.320 million head, was up 112,000, or 3.45%, from 6.109 million last year was well above estimates of up 1.7%. It also was 110,000, or 1.77%, above the 6.210 million in the last report.
The market hog inventory, at 67.131 million head, was up 2.230 million, or 3.44% from last year and up 403,000, or 0.60% from 66.728 million last quarter but compared favorably to analyst estimates of up 3.1%. This is the largest June 1 market hog inventory since estimates began in 1964.
The US inventory of all hogs and pigs on June 1 was reported at 73.451 million head, up 2.441 million, or 3.44%, from 71.010 million a year ago and up 513,000, or 0.70%, from March 1’s 72.938 million. This is the highest June 1 inventory of all hogs and pigs since estimates began in 1964.
PIG CROP UP
The March-May 2018 pig crop, at 33.167 million head, was up 1.377 million, or 4.33%, from 31.790 million in the 2017 period. This was the largest March-May pig crop since estimates began in 1970.
The May pig crop totaled 11.113 million head, up 537,000, or 5.08%, from 10.576 million a year earlier. The April pig crop was pegged at 10.733 million head, up 435,000, or 4.22%, from 10.298 million, and the March pig crop was listed at 11.320 million, up 404,000, or 3.70%, from 10.916 million in March 2017.
SOWS FARROWED HITS 50% OF BREEDING HERD
Sows farrowed during the quarter totaled 3.121 million head, up 107,000, or 3.55%, from 3.014 million in the 2017 period.
The sows farrowed during this quarter represented 50% of the breeding herd. The average pigs saved per litter was a record high 10.63 for the March-May period, compared with 10.55 last year and 10.58 in the December-February quarter.
By month, producers farrowed 1.032 million head in May, up 29,000, or 2.89%, from 1.003 in May 2017. April farrowings were reported at 1.017 million head, up 42,000, or 4.31%, from 975,000 a year earlier. March farrowings totaled 1.072 million head, up 36,000, or 3.47%, from 1.036 in the year-earlier month.
Farrowing intentions for the June-August quarter were reported at 3.170 million head, up 49,000, or 1.57%, from 3.121 million a year earlier.
CATTLE, BEEF RECAP
Three hundred six head of fed cattle sold Wednesday on the Livestock Exchange Video Auction at $106 per cwt, down $4 from the previous Wednesday’s $110.
Cash trade was reported Wednesday at $106 per cwt on a live basis, down $2 to $4 from last week, and at $168 to $170 on a dressed basis, down $3 to $4.
The USDA choice cutout Wednesday was down $1.53 per cwt at $215.30, while select was off $0.69 at $200.88. The choice/select spread narrowed to $14.42 from $15.26 with 93 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $141.78 per cwt, down $0.03. This compares with Wednesday’s Aug settlement of $145.77, down $0.32.