H&P Report: Bearish

December 28, 2012 08:19 AM
 

Traders expecting the Quarterly Hogs & Pigs Report to show contraction in the pork industry are disappointed by most categories coming in near year-ago levels -- pointing to at least-steady pork production in 2013. With a steady breeding herd and another increase in the number of pigs per litter, pork production will likely increase in the year ahead. As a result, the report is getting a bearish read and is expected to weigh on futures when traders return on Monday.

The report showed All Hogs & Pigs, Kept for Breeding and Kept for Marketing at 100% of year-ago levels, as well as all market hog weight categories. The report also showed the Sept-Nov. pig crop equal to year-ago, with pigs per litter at 101% of year-ago levels to reflect continued efficiency gains.

Where it gets interesting is in the farrowing intentions categories. Traders expected the report to reflect farrowing and farrowing intentions two to three percentage points lower than year-ago and the report showed intentions steady to two percentage points below year-ago. This signals high feed costs have not yet begun to dramatically impact producers' plans.

USDA made adjustments of less than one half of one percent to the September 2012 total inventory. However, the March-May 2012 pig crop was revised UP by 2.16%, to 30.077 million, to now stand at 102.8% of year-earlier levels. Most of those hogs have been marketed, but it indicates the slaughter surge in September didn't include sows.

 

Quarterly H&P Report

USDA

Avg. trade guess

Range

% of year-ago

 

All Hogs and Pigs

100

99.1

98.7-100.4

Kept for breeding

100

99.3

99.1-99.5

Kept for marketing

100

99.1

98.7-100.5

Sept-Nov pig crop

100

99.0

98.3-100.8

Sept-Nov pigs per litter

101

100.8

100.2-101.1

Sept-Nov farrowings

99

97.9

97.3-99.1

Dec-Feb farrowing int.

100

98.4

96.6-99.0

Mar-May farrowing int.

98

98.8

96.6-100.3

Hogs under 50 lbs.

100

98.4

97.0-100.1

Hogs 50 to 119 lbs.

100

99.0

98.6-99.8

Hogs 120-179

100

99.6

98.6-101.1

Hogs 180 and over

100

100.5

99.0-101.8


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