Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose to a one-week high on Thursday but face pressure from a U.S. government report that showed a larger-than-expected domestic herd, analysts said.
The U.S. Department of Agriculture, in a quarterly report issued after trading ended, said the inventory of all hogs and pigs on Sept. 1 was 74.3 million head, up 0.3 per cent from a year earlier. Analysts surveyed by Reuters expected a decline of 0.8 per cent.
Analysts had generally expected a smaller herd as low prices for pigs and high operational costs have made it unprofitable for producers to raise hogs.
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Now, USDA’s bigger-than-expected numbers look bearish for futures, said Altin Kalo, economist for Steiner Consulting.
“The pullback that was expected in terms of supplies may not happen, or at least it may not happen to the degree that the market was expecting,” Kalo said on a webinar.
Most-active CME December lean hogs advanced 2.75 cents to finish at 75.525 cents/lb. (all figures US$).
The USDA report said inventories of market hogs were up 0.4 per cent at 68.2 million head, though analysts expected a 0.7 per cent drop. Meanwhile, the June-August pig crop was up 0.4 per cent from 2022 at 34.2 million head. Analysts expected a 1.4 per cent decline.
“Most numbers in the report, especially the number of market hogs, are quite a bit higher than what analysts were expecting,” Kalo said.
The average pigs saved per litter was 11.61 for the June-August period, compared to 11.13 last year. The increased productivity is driving up supply numbers, even though some producers have reduced their numbers of sows, or mother pigs, analysts said.
In CME’s cattle markets, most-active November feeders ended up 2.875 cents at 257.675 cents/lb. after falling on Wednesday to their lowest price since Aug. 24.
Most-active December live cattle closed 2.25 cents higher at 190.425 cents/lb. On Wednesday the contract hit its lowest price since Sept. 14.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
