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Published January 06, 2014, 09:47 AM

US hog herd falls more than expected

The U.S. hog herd fell by 1 percent in the latest quarter, slightly more than forecast, U.S. government data shows, as a deadly swine virus thwarted pork producers’ efforts to rebuild herds.

By: Theopolis Waters, Reuters

The U.S. hog herd fell by 1 percent in the latest quarter, slightly more than forecast, U.S. government data shows, as a deadly swine virus thwarted pork producers’ efforts to rebuild herds.

“This confirms that PED (Porcine Epidemic Diarrhea) is in the nation’s hog herd, which was not shown nor implied in their previous report (September),” says Rich Nelson, chief strategist at Allendale Inc.

The U.S. Department of Agriculture on Dec. 27 reported the U.S. hog herd, as of Dec. 1 at 99 percent of a year ago, or 65.94 million head. Analysts, on average, expected 66.307 million head, or 99.9 percent of a year earlier. The U.S. hog herd for the same period last year was 66.374 million head.

The quarterly report was the first to show a noticeable drop in hog numbers, which analysts attributed to Porcine Epidemic Diarrhea virus (PEDv), reinforcing expectations that herds will shrink as the industry struggles to develop vaccines to treat the virus that has killed thousands of young pigs across 20 states.

The virus outbreak was largely undetected in USDA’s September survey.

In the Dec. 27 report, hog numbers in all three major categories used by traders and producers as an insight into the state of the market — all hogs and pigs (or inventory), breeding and marketing — came in under expectations.

The closely watched report was surprisingly bullish, Nelson says.

On Dec. 27, Chicago Mercantile Exchange hog futures for February delivery closed up 0.35 cent per pound, or 0.4 percent, at 85.65 cents ahead of the report.

As of Dec. 15, the number of confirmed cases with PEDv totaled 1,764, according to data from USDA’s National Animal Health Laboratory Network. Each case could represent hundreds to thousands of hogs.

Smithfield Foods, the nation’s biggest hog producer, says PEDv might result in a loss of 2 million to 3 million hogs, or a 2 to 3 percent decline in U.S. production in 2014.

Analysts and swine veterinarians have stressed that while the virus is fatal to young pigs, pork is safe to eat.

The government showed the U.S. breeding herd at 99 percent of a year earlier, or 5.757 million head, compared with average trade expectations for 101 percent, or 5.875 million. A year ago, the breeding herd was 5.819 million head.

The difference between industry estimates and USDA’s breeding herd number was “critical,” says Livestock Marketing Information Center director Jim Robb.

“Down the road (that) certainly sets up for tighter hog production than what most analysts had been expecting,” he says.

Another sign that PEDv is taking its toll on baby pigs is the slowdown in the upward trend in baby pigs per sow, analysts say.

The data on Dec. 27 showed producers had a record number of pigs per litter during the period at 10.16, up marginally compared with last autumn’s record of 10.15. But that is the smallest increase in the past two quarters.

“When pigs per litter is up only one-tenth of 1 percent after averaging up 2 percent since 2003, that’s quite a difference,” says University of Missouri livestock economist Ron Plain.

USDA made significant revisions to past reports to account for larger-than-expected hog slaughter in recent months, he says.

The Dec. 1 supply of market-ready hogs was 99 percent of a year earlier at 60.183 million head. Analysts, on average, expected a 0.2 percent decline, or 60.435 million. Last autumn’s market hog supply was 60.555 million.

“The overall numbers do not show the expansion that the industry has expected given the profitability of producers,” Robb says.

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