U.S. Market Hog Inventory Drops 3.7% Amid Pig-Virus Losses

Mar 28, 2014 4:23 pm ET

(Updates with prices in sixth paragraph and analyst’s comment starting in seventh.)

March 28 (Bloomberg) -- The U.S. inventory of hogs that farmers plan to sell for slaughter was 3.7 percent lower than a year earlier as a piglet-killing virus contributed to the smallest total herd in seven years, the government said.

The number of so-called market hogs fell to 57.05 million head as of March 1 from 59.24 million a year earlier, the U.S. Department of Agriculture said today in a quarterly report. Ten analysts in a Bloomberg survey forecast a 6.1 percent decline.

The total herd of hogs and pigs fell 3.3 percent to 62.9 million, the smallest since March 2007, from 65.07 million a year earlier, according to the USDA. Analysts projected a 5.4 percent drop.

The number of sows kept for breeding as of March 1 rose 0.3 percent to 5.85 million, from 5.84 million a year earlier, the report showed. Analysts projected a 0.3 percent decline.

Porcine epidemic diarrhea virus has been found in at least 27 states since April, with more than 5,000 confirmed cases, according to the National Animal Health Laboratory Network. Infected suckling pigs, which are three weeks old or younger, have seen as high as 100 percent mortality.

This year, hog prices have rallied 52 percent, poised for the best quarterly gain since 1999. Today, the contract for June settlement rose 0.2 percent to $1.29575 a pound on the Chicago Mercantile Exchange, closing before the USDA issued its report. The price reached a record $1.33425 on March 18.

‘Not a Disaster’

The “bit of a bearish report” means hogs may move “sharply lower” on March 31, said Lawrence Kane, a market adviser at Stewart-Peterson Group in Yates City, Illinois. There’s a “possibility” of prices dropping by the 3-cent exchange limit, he said.

“There’s a dip and everybody had been talking about a dip, but there’s no massive hole in the marketings,” Kane said in a telephone interview after the report. “We are showing an impact from PED, but it’s not a disaster.”

Sows averaged 9.53 pigs per litter during the three months ended Feb. 28, down 5.5 percent from 10.08 in the same period a year earlier, the USDA said. The pig crop during that time totaled 27.32 million head, down 2.8 percent from a year earlier, according to the report.