Friday’s Hogs & Pigs Report Could be Dated
A government report due later this week is expected to signal an expansion in hogs supplies through the balance of the year and beyond–that is, before drought conditions in recent weeks began to threaten the coming U.S. corn crop, which poses the risk of sharply higher feed costs.
The number of hogs and pigs on U.S. farms as of June is expected to be up 1.3% compared to a year ago, to 66.17 million head, according to a survey of analysts by Dow Jones ahead of a quarterly hogs-and-pigs report from the U.S. Department of Agriculture, scheduled for release Friday at 3 p.m. EDT (1900 GMT).
Traders largely assume the data in the report will be somewhat stale because scorching conditions across much of the U.S. corn belt have begun to threaten the coming corn crop in recent weeks, leading to a fast surge in corn futures, which could press hog producers to limit production in order to feed as few mouths as possible. Corn futures for September have shot up nearly 23% in less than two weeks, to close most recently at $6.25 1/4 a bushel at the Chicago Board of Trade.
The report is nonetheless expected to signal that producers had intentions of turning out higher supplies later this year and next year before facing the specter of sharply higher corn prices. Absent a shock in feed costs, analysts say producers likely plan to expand production by holding back more hogs for breeding and also through long-running gains in the number of piglets per litter. In fact, production plans for most of 2012 are tied to breeding and production that occurred earlier this year, meaning producers may have few options in limiting production this autumn and winter beyond growing hogs for a shorter period of time.