CME: Overall Hog Inventories Expected to be Down
US - On Friday, 25 September, USDA will issue its quarterly update of the inventory of hogs and pigs in US operations, write Steve Meyer and Len Steiner in their DLR for 23 September.The report will provide a gauge not only of current hog supplies
but also estimates of hog and pork production in
2010. Based on a survey of analysts conducted by
Reuters, the expectation is for overall hog inventories to
be down 1.7 per cent from a year ago, with market hogs down by
a similar amount and the breeding herd also down 2.7 per cent.
On the latter, there continues to be plenty of disagreement
and this is reflected in the wide divergence of opinions.
The current average of estimates indicates that the
breeding stock as of 1 September is expected to e down by
a similar amount as in the June survey (-2.7 per cent).
Those
that hold a more bearish view of the market likely will
point out that despite much talk, US producers continue
to be reluctant to sharply cut back the production base,
be this because of large sunk in investments, hopes for a
rebound or lower grain prices in July and August. They
also point to the fact that a significant number of sows
during the recent increase in sow slaughter are Canadian
animals rather than US stock. More bullish analysts, on
the other hand, note that many producers had little
choice but to liquidate, following a prolonged period (20 of
22 months) of losses.
One item that will also likely get much attention is the
estimate for the pig crop in the June - August period.
That estimate will be a function of both farrowings and
pigs per litter. The average of analysts’ estimates indicates
that the pig crop will be down 1.8 per cent from the previous
year, a much needed reduction but likely smaller than those calling for a significant reduction had hoped for.
As we have
noted many times before, the steady gains in productivity have offset much of the decline in sow numbers. Indeed, the pig
crop may end up being even larger as pigs per litter in recent quarters have increased by more than 1.4 per cent (the current estimate
for June - August). Overall, the estimates do not paint a very bullish picture for pork going forward.
Please refer to page 2 of the link to view a special CME notice regarding the daily price limit for bellies in Q4. The
price limit for the upcoming quarter will be determined on the basis of the closing futures price on 30 September.