(Reuters) — The U.S. hog herd during the September-November quarter grew more than anticipated, a U.S. Department of Agriculture report showed on Tuesday, reflecting a market driven by cheaper feed that extended producer profit, said analysts.
The deadly porcine epidemic diarrhea virus, which has killed an estimated 8.5 million pigs since May 2013, was less virulent than some had expected due to enhanced biosecurity measures, moderate fall weather and the use of two vaccines, they said.
The USDA report showed the U.S. hog herd as of Dec. 1 at 102 percent of the year-ago level, at 66.050 million head. Analysts, on average, expected 65.747 million head, or 101.5 percent of the year-earlier herd.
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The U.S. breeding herd was 104 percent of the year-ago level, at 5.969 million head, compared with average trade expectations for 103.0 percent, or 5.930 million.
The Dec. 1 supply of market-ready hogs for sale to packers was 102.0 percent of a year earlier at 60.082 million head. Analysts, on average, expected a 1.3 percent increase, or 58.785 million.
The data showed pigs per litter, the category most affected by the virus, at 10.23 head during the fall period, or 101 percent of the 10.16 in the year-ago period.
There were fewer pigs lost to the virus, said University of Missouri economist Ron Plain, and farmers were more profitable given less-expensive feed and record-high hog prices, he added.
The report suggests increased supplies at least through the middle of January, which could challenge prices for slaughter hogs at that time, Plain said.
“The wild card is whether we’d see an increase in PED cases over the winter,” he said.
Globex Chicago Mercantile Exchange lean hog futures, which were trading at the time of the report’s release, remained higher but slipped from session tops in response to Tuesday’s report.
Futures have factored in an extremely bearish production scenario after falling from highs earlier this year, which probably explains the limited reaction to Tuesday’s nominally bearish data, said Doane Advisory Services economist Dan Vaught.
“The real question going forward is how much attention producers are going to pay to the bearish forecast,” he said.
