Too many pigs push hog futures markets down

By Janie Gabbett on 4/1/2008 for Meatingplace.com

USDA's quarterly Hogs and Pigs report on Friday revealed more U.S. hogs than expected, driving hog futures markets down on Monday and not boding well for live hog prices for the rest of 2008.

USDA reported the inventory of all hogs and pigs on March 1, 2008 was 65.9 million head, up 7 percent from a year ago, and well above analysts' expectation of a roughly 4.5 percent rise from last year. The December 2007-February 2008 pig crop, at 28.1 million head, was up 6 percent from a year ago.

Hog futures markets fell by the daily limit in early trading Monday and closed just above the daily limit declines, but still sharply lower.

The report also showed 5 percent more sow farrowings in the December-February period as well as larger average pig litters, due in part to the success of the circovirus vaccine.

Paragon Economics President Steve Meyer told Meatingplace.com the report indicates hog supplies will remain large through September, pressuring live hog prices at the same time prospects of fewer corn acres being planted will boost feeding costs. He predicted live hog prices averaging as much as $10-$15 per hundredweight below the cost of production this year.

The only good news in Friday's report, Meyer said, was evidence the sow herd is at least starting to slow. March-May farrowing intentions were up only slightly from a year ago and June-August farrowing intentions were down 2 percent compared with a year ago.