Market News

More hogs than expected should mean lower prices

The U.S. hog herd has taken a hit from PEDv, but not as large of a hit as analysts were expecting and as one market analyst tells Brownfield, prices will likely come down.

According to Ron Plain, Livestock Economist at the University of Missouri, futures markets in particular will probably bear the brunt of the report, “If the traders believe USDA’s numbers, we’re probably going to see a sharp decline in hog futures. The number of hogs that USDA says we’ve got out there is just too many, I think, to support summer hog prices as high as futures markets expected.”

Plain says pigs per litter was where the impact of PEDv really showed up, “USDA says we were down five and a half percent in pigs per litter during the winter months. That’s a big drop. We only on rare occasions drop below zero. We’ve been seeing that number run one to two percent higher than a year ago, most of the time, so to be down that much is something most unusual and I think it’s due to the PED virus.”

Plain does add the numbers aren’t guaranteed and could be adjusted in the next quarterly report.

On March 1, 2014, all hogs and pigs totaled 62.9 million head, down 3% from March 1, 2013, when the average estimate was for a 5.4% decline. By weight, the under 50 pound category was 4% below last year and 50 to 119 pounders were 3% lower, while the 120 to 179 pound category was also down 3% and hogs weighing 180 pounds and heavier dropped 5%. The breeding herd was a little bit larger than last year at 5.85 million head and market hogs were down 4% at 57 million head.

The December to February pig crop came out at 27.3 million head, 3% below a year ago, with 2.87 million sows farrowing, up 3%, and pigs per litter averaged 9.53, compared to 10.08 last year, a definite sign of PEDv. March to May farrowing intentions are projected at 2.9 million head and June to August intentions are seen at 2.96 million head, which would be up 2% from 2013.

The total number of hogs under contract on operations larger than 5,000 head made up 48% of the total inventory, compared to 47% this time last year.