Chicago | Reuters — The number of hogs on U.S. farms in the December-February quarter was up 3.1 per cent from the same period a year ago, a record high for the quarter, according to Thursday’s U.S. Department of Agriculture (USDA) report.
Farmers added extra pigs, encouraged by less-costly feed during that period and the addition of four new pork packing plants since last year.
Plentiful hogs will keep a lid on pork prices at a time when warmer weather ushers in spring and summer cookouts, said analysts.
But weaker hog prices in March, and the potential of increased feed costs, could make farmers think twice about expanding their herds in the coming months.
“There may be some changing dynamics. Farmer profitability has been under pressure during March because of lower hog prices and we’ve crept up feed costs,” said Livestock Marketing Information Center director Jim Robb.
Another challenge facing the industry is the threat of a trade war between the U.S. and China, which has drawn U.S. pork exports into the fray, said analysts.
“What is bothersome is are we going to see some of the major importers of pork in the Orient backing away from our markets and not taking as much pork,” said Linn Group analyst John Ginzel.
The U.S. government’s prospective plantings report on Thursday projected a year-on-year decline in plantings of corn and soybeans.
Chicago Mercantile Exchange hog futures on Monday may be influenced more by near-term market fundamentals than Thursday’s hog report whose results were close to forecasts, said analysts.
USDA’s report on Thursday showed the U.S. hog herd as of March 1 at 103.1 per cent of the year-ago level or 72.908 million head, the most ever for the March quarter since the government began compiling the data in 1988.
Analysts’ average forecast was 72.902 million head.
The U.S. breeding herd was 101.7 per cent of the year-ago level, at 6.2 million head, up from 6.098 million last year.
The average trade forecast was 6.186 million.
The March 1 supply of market-ready hogs for sale to packers was 103.3 per cent of a year earlier, at 66.708 million head, up from 64.603 million last year. Analysts, on average, had estimated 66.711 million.
“Now the big shock is going to be this prospective planting report that came out. Is that going to now change some peoples opinions as the cost of feed likely will increase,” said Ginzel.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.