Thursday’s USDA Quarterly Hogs and Pigs report is being interpreted bearishly by many market analysts, so lean hog futures prices could trade lower today.
The report showed more hogs in the US herd than a pre-release market survey of analysts had expected. All weight categories and the December-February pig crop exceeded expectations.
Christopher Lehner, market analyst for ADMIS Investor Services, said in a short comment following the report’s release that adding more hogs at a time when packers are stretched to the limit of available labor is negative to hog prices. Adding more hogs to growing world supplies also is negative.
The only bright side for hog producers may be the Kept for Breeding category at slightly more than 100% of last year, which was below expectations, Lehner said. However, increasing litter sizes will add more hogs.
OVERALL INVENTORY UP
The US inventory of all hogs and pigs on March 1 was 77.629 million head, up 2.968 million, or 3.98% from 74.661 million on March 1, 2019, but down 1.024 million, or 1.30%, from a revised 78.653 million on Dec. 1, 2019. A survey of analysts prior to the report indicated that, on average, they expected the herd to rise 3.4% from a year earlier.
Of those, 6.375 million were kept for breeding, up only 26,000, or 0.41%, from 6.349 million a year ago, but down 86,000, or 1.33%, from 6.461 million in the December report. The pre-release survey showed analysts expected the report to show a 1.4% increase in the breeding herd.
Hogs kept for marketing totaled 71.254 million head, up 2.941 million, or 4.31%, from 68.313 million a year ago and up 377,000, or 0.53%, from 70.877 million in the December report. The average analyst estimate for the number of market hogs in the system was up 3.5% from a year earlier.
MARKET HOGS UP IN ALL WEIGHTS
All weight categories of market hogs were up from a year ago. Those weighing less than 50 pounds on March 1 totaled 22.221 million head, up 848,000, or 3.97%, from 21.373 million a year earlier and up 93,000, or 0.42%, from 22.128 million in December.
Hogs weighing 50 to 119 pounds on March 1 came to 19.853 million head, up 685,000, or 3.57%, from 19.168 million a year earlier and up 157,000, or 0.80%, from 19.696 million in December.
Hogs weighing 120 to 179 pounds totaled 15.581 million on March 1, down 580,000, or 3.87%, from 15.001 million a year earlier and up 605,000, or 4.04%, from 14.976 million on Dec. 1.
Market hogs weighing 180 pounds or more for this report totaled 13.598 million head, up 827,000, or 6.48%, from 12.771 million a year earlier but down 478,000, or 3.40%, from 14.076 million three months earlier.
The 2020 estimated pig crop was 34.734 million head up from 33.163 million last year and up from 31.497 million in 2018.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains this week at $118 to $120 per cwt on a live basis, up $6 to $7 from last week, and at mostly $190 on a dressed basis, up $5 to $10.
The USDA choice cutout Thursday was down $1.73 per cwt at $253.57, while select was off $0.92 at $242.17. The choice/select spread narrowed to $11.40 from $12.21 with 82 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $128.50 per cwt, up $5.06. This compares with Thursday’s Mar contract settlement of $130.80, down $1.27, and the Apr settlement of $125.10, down $3.62.