The national hog herd rose to a quarterly record in September, suggesting heavy supplies for the remainder of the year even as inventories ease in early 2018.
The U.S. Department of Agriculture said on Thursday that the total inventories of hogs and pigs rose to 73.5 million head as of Sept. 1, up 3% from June and 2% from the same time last year. That was a record high for the quarter, coming as cheap feed prices and new slaughter plants encouraged farmers to expand their operations.
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Hogs kept for breeding on Sept. 1 rose 1% from a year earlier, while hogs for market, or slaughter, rose 3%.
Those figures were largely in line with expectations.
In particular, supplies of heavier hogs, which will go to slaughterhouses this year, were at the high end of estimates. Inventories of hogs weighing 120 pounds to 180 pounds and over rose 4% from a year earlier. Market participants said that would likely pressure the front-end futures contracts as ample supply of hogs weighed down cash prices.
"There's a lot of pork out there up front right now," said Jim Burns, a broker with Rosenthal Collins Group at the Chicago Board of Trade. "We've got to work through a lot of hogs."
Supplies for lighter hogs, which will be ready for slaughter in the first quarter of next year, were at the lower end of estimates. Analysts said that should contribute to slower growth of pork supply next year, buttressing prices.
Hog futures have been under pressure recently, falling 40% from a mid-July high, as hog weights rose and new slaughter capacity pushed pork processing to records.
Bumper weekly export sales of pork released by the USDA on Thursday gave front-month futures a boost.
"We've got plenty of hogs now and plenty of hogs coming," said Craig VanDyke of Top Third Ag Marketing in a note to clients. "What we need is strength in demand and maybe exports are hinting that we might be finding cheap enough prices to spur that demand."
October lean hog futures at the Chicago Mercantile Exchange rose 0.3%, to 55.55 cents a pound, before the report on Thursday, while the most-active December contract tumbled 2.3%, to 58.275 cents a pound.
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(END) Dow Jones Newswires
September 28, 2017 16:31 ET (20:31 GMT)