Chicago/Reuters – A pre-Christmas USDA quarterly report showing showing an unexpectedly large hog herd caused Chicago Mercantile Exchange lean hog futures fell more than two per cent Dec. 23.
USDA said Dec. 23 the hog and pig herd as of Dec. 1 was 71.5 million head, or 104 per cent of last year. Analysts expected a herd size of 71.1 million or 101.7 per cent of a year ago.
Pork production effectively is the largest ever, as hogs now weigh significantly more than they did in 1943, when the herd reached 83.7 million, according to USDA. “There’s a much bigger supply of pigs lined up here for the next few months, a lot more hogs to process. This adds to the slightly negative environment after the rally,” said Allendale Inc analyst Rich Nelson.
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He said a reduced slaughter during the holiday season cut into demand and further weighed on prices.
Declines in both hog and cattle futures were minimized by monthly Cold Storage data showing 520.3 million lbs of pork and 531.5 million lbs. of beef in U.S. freezers in November, each below respective analyst estimates of 566.1 million lbs of pork and 544.6 million lbs. of beef. “That clearly shows retailers were more aggressive (selling) beef than trade expectations,” Nelson said.
USDA also said 10.652 million head of cattle were being fattened on feed for slaughter as of Dec. 1, slightly above estimates for 10.636 million. New placements on feed in November of 1.843 million head, or 115 per cent of last year, were slightly above estimates of 112.3 per cent of a year ago.
“A bit on the bearish side due to heavier placements,” a cattle and hog broker said of that USDA cattle data.
