CHICAGO, Illinois -The July 27 monthly pig report from the United States Department of Agriculture shows a much larger than expected number of sows farrowing in June and a near-record number of pigs per litter.
That boosted the pig crop number above trade expectations, said livestock analysts and university economists.
The larger than expected numbers are viewed as bearish, but most analysts expect little effect on cash and futures markets because of questions raised over the rise in hog production during hot weather.
“On face value, the report is a little bit bearish,” said Ron Plain, livestock economist at the University of Missouri.
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“However, the reason it’s bearish is because of this near-record number of pigs per litter, and certainly it’s questionable whether they actually were that high.”
Sow farrowings at 972,000 head, 101.3 percent of last year, compares with trade estimates of 965,000 to 975,000 head. The pig crop at 8.709 million head, is up 2.7 percent, and is above trade estimates. Pigs per litter, at 8.96 head, were up 1.5 percent, compared with estimates of 8.855 to 8.88 head, the largest number since a record 8.97 head in May 1997.
The report, if it has any effect at all on the Chicago Mercantile Exchange lean hog futures contract, may apply some pressure on December and February contracts. But no effect at all is seen in nearby futures as hot weather is expected to be the main thing on traders’ minds, analysts said.
“The weather is going to do more positive things to the market than this report is going to do negative,” Plain said.
Sources were skeptical about the report, based on slaughter figures, known productivity and the size of the breeding herd that was reported on June 1.
“I’d wait a while longer before I made any major decisions based upon this pig report,” Plain said.
Analysts said profitability could be a reason to increase the herd. Producers appear to have been making a profit for more than a year and they may have increased production.
But analysts still feel the USDA should have done something to bring the production in line with slaughter. They expected revisions so they could make sense of the lighter-than-projected pace of hog slaughter despite additional hogs being imported from Canada.
“They (USDA) made no revisions of farrowing or pig crop numbers from the fall and winter of last year, which seems inconsistent with the levels of slaughter here so far this summer,” said Chuck Levitt, a livestock analyst with Alaron Trading Corp.
“It appears that they are waiting for the next quarterly report, the September report, to perhaps make those revisions. In the meantime, we are continuing to deal with numbers that have an apparent inaccuracy based on slaughter figures through the late spring and early summer period thus far,” he said.
The size of the June pig crop appears to be inconsistent with all that has been learned based on productivity the first half of this year, Levitt added.
