H&P Report: Bigger-Than-Expected Market Hog Inventory

December 23, 2011 06:19 AM
 

This report should get a generally negative read from lean hog traders, but with lean hog futures still open there has been no selling pressure on futures. We expect a generally negative read to the report after many key categories came in above the average pre-report trade estimate and at the top end of guess ranges. But so far, the USDA survey findings are being ignored by the market.

Far-deferred futures could find some support from expectations of a 1% drop in March-May farrowings. However, with continuing efficiency gains in the farrowing house, more pigs per litter would likely hold the March-May pig crop at least steady with the year-ago tally.

Also limiting pressure on deferred futures should be the smaller-than-expected breeding herd. As expected, USDA sees a slight increase in the number of hogs coming to market through the first quarter of 2012. For the first half of January, slaughter should be steady to slightly above year-earlier levels and climbing to a 2% gain on year-ago by the end of the quarter.

Adding pressure across the board are some revisions to past inventories. June All Hogs & Pigs tallies were revised up about 1% from last quarter's report and September inventories were revised up about 0.5%.

Quarterly H&P Report Expectations

USDA

Avg. trade guess

Range

% of year-ago

 

All Hogs and Pigs

102

101.3

100.0-102.0

Kept for breeding

100

100.8

100.4-101.0

Kept for marketing

102

101.3

100.0-102.0

Sept-Nov pig crop

102

101.6

101.0-102.0

Sept-Nov pigs per litter

101

101.6

101.0-102.0

Sept-Nov farrowings

100

99.9

99.5-100.2

Dec-Feb farrowing int.

101

100.6

100.0-101.1

Mar-May farrowing int.

99

100.8

100.5-101.3

Hogs under 60 lbs.

102

101.8

101.3-102.0

Hogs 60 to 119 lbs.

102

101.2

100.8-102.0

Hogs 120-179

102

101.0

100.1-102.0

Hogs 180 and over

100

101.2

100.6-101.6


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