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CME: Little Growth in US Hog Numbers

02 January 2013

US - About those dire predictions of massive liquidation of breeding animals by US pork producers: "Ahem — never mind!" Friday’s quarterly Hogs and Pigs Report from USDA certainly showed little growth in US hog numbers but the big news was that is showed no decline, write Steve Meyer and Len Steiner.


New Year’s Day holiday hours for CME Globex and Trading Floors are as follows:

  • Globex trading for CBOT, KCBT and MGEX grain products and CME livestock and dairy products will close as normal today, December 31 and will be closed all day tomorrow, New Year’s Day.
  • Livestock and dairy products will reopen at 9:05 a.m. on Wednesday. Grain products will reopen at 9:30 a.m., CST on Wednesday.
  • All CME Group trading floors close at 12:00 p.m. today and will be closed Tuesday, 1 January. They will reopen at normal times on Wednesday, 2 January.

Further, virtually every number in the report was larger than what the analysts surveyed by DowJones expected. Not dramatically larger but larger none the less in the face of very bad economic conditions this year and a still -negative outlook for next year. It was enough to prompt one of our analyst colleagues to comment “These guys are fearless!” We would argue with that a bit as we think there is plenty of fear out there among hog producers. Our judgment is that these guys are courageous — overcoming their fear to do what they believe is right and good and necessary in the long run.

We know there is a pretty fine line between courage and foolishness but, for many reasons discussed in these pages on several occasions, we do not think hog producers have crossed that line. But make no mistake—They are "All in" in this situation — perhaps more so than they have ever been "All in." Some highlights of Friday’s report are:

  • The breeding herd did not decline — as so many (including us) have been expecting and some are insisting is happening in spite of ample actual data that say otherwise. The 1 December inventory of 5.817 million breeding animals was 0.2 per cent larger than one year ago. That doesn’t suggest blind optimism by any stretch but is it almost a full percent larger than what analysts expected and is 29,000 head LARGER THAN THE 1 SEPTEMBER herd.

  • The 1 December market herd of 59.117 million head is the second largest December herd ever and was also nearly a full percent larger than the average pre-report estimate. The only weight classes that were very close to expected sizes were the 120-179 pound and 180- pound and over groups. As we pointed out last week, comparing slaughter this December to that of last year is a bit tricky due to the way Christmas fell in 2011 but our best effort to make an apples-to-apples comparison says that slaughter this year is virtually the same as one year ago, meaning the 180+ inventory of 100.4 per cent is close enough to not cast doubt on this report’s accuracy.

  • September-November farrowings were estimated to be 2.9 million litters, 1 per cent smaller than last year but more than a percent larger than expected. The number is also 50,000 litters larger than the September-November expectations were in the 1 September report.

  • December-February intentions of 2.865 million litters are equal to last year but 1.6 per cent larger than expected and 44,000 litters larger than the Dec- February expectations in the September report.

  • In its first estimate for the quarter, USDA expects March-May farrowings to be lower than one year ago and the –1.9 per cent is actually a bigger decline than was expected, on average, by analysts.

  • USDA made a HUGE revision to the March-May 2012 pig crop, adding 636,000 head to, we presume, rectify the difference between its 1 September estimate and fall slaughter. The new estimate of 30.077 million head is the first ever above 30 million. Put that figure with 1.9 per cent fewer Mar-May 2013 litters that are 1 to 2 per cent larger and you will get fall 2013 slaughter that is likely little, if any, smaller than this year’s numbers.

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