(Reuters) — The U.S. hog herd grew four percent during the June-August quarter from a year ago, a U.S. Department of Agriculture report showed Sept. 25, as the industry continues to bounce back from a deadly pig virus, analysts said.
The increase was close to analysts’ expectations.
They said hog farmers added to their herds incrementally as their profit margins teetered precariously in the red.
“The natural tendency is to expand hog production. Red ink slows things down,” said University of Missouri economist Ron Plain.
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The USDA report showed the U.S. hog herd as of Sept. 1 was up four percent over the year-ago level, at 68.395 million head, the highest for the quarter since the government began the data series in 1988.
Analysts, on average, expected a 3.5 percent increase.
The U.S. breeding herd was up one percent at 5.986 million head, compared with average trade expectations for a .2 percent in-crease.
The Sept. 1 supply of market-ready hogs for sale to packers was up four percent at 62.41 million head. Analysts, on average, expected a 3.8 percent increase, or 62.341 million.
Pigs per litter, the category most affected by the virus, was 10.39 during the summer period, a two percent increase. It was the most for any quarter, breaking the 10.37 record set during the latest spring period.
Record pigs per litter reflects industry success at managing porcine epidemic diarrhea virus, resulting in a spike in production so far this year, said analysts and economists.
Rather than the eight percent increase in production so far this year, they see a modest rise in 2016 based on the report’s lightweight category and farrowing intentions, the number of female hogs expected to give birth.
Investors and analysts agreed that the market may quickly absorb the report and turn their attention to more influential near-term market fundamentals.
