(Reuters) — The U.S. hog herd on March 1 was seven percent larger than the previous year, a U.S. Department of Agriculture report showed.
Analysts said it reflected producer profitability and less-severe porcine epidemic diarrhea virus losses.
The report weighed on nearby Chicago hog futures contracts, but it also indicated the herd growth might slow later in the year, providing support to contracts late in the year.
Hog farmers expanded their herds, thanks to vaccines and tighter biosecurity measures that mostly eliminated the PED virus, which wiped out an estimated nine million pigs since May 2013, they said.
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The USDA report showed the U.S. hog herd as of March 1 at 107 percent of the year-ago level, at 65.934 million head, the largest total for that period since 66.718 in 2008.
Analysts had expected 65.676 million head, a 6.8 percent increase.
The U.S. breeding herd was up two percent, at 5.982 million head, compared with average trade expectations for 3.6 percent increase.
The March 1 supply of market-ready hogs for sale to packers was up eight percent at 59.953 million head. Analysts, on average, expected a 7.2 percent increase, or 59.650 million.
The USDA’s pigs per litter category, which is the most affected by the virus, was at 10.17 pigs during the December to February period, up seven percent from a year ago. The result topped the record for that period of 10.08 pigs in 2013.
“The report is short-term bearish and long-term bullish,” said University of Missouri economist Ron Plain, who cited the huge year-over-year jump in the market hog inventory result versus a smaller-than-expected breeding herd outcome.
The market hog increase was likely a result of more pigs that survived PED than anticipated, he said.
Don Roose, an analyst with Iowa-based U.S. Commodities, said the data sent a signal that the industry is in “full blown” expansion mode.
However, he said growth will likely slow based on the surprising decline in the expected June-August farrowing figure. Farrowings refer to sows expected to give birth.
Farrowings for June-August are expected to fall to 2.927 million, down two percent from the same period last year.
The USDA survey suggests plentiful supplies through the summer, analysts said. Prices in the second half of the year should be supported based on easing production beginning in late summer 2015, analysts said.
