March 30, 2017 / 9:17 PM / 8 months ago

Record-large March U.S. hog herd eclipses forecasts

* Less-costly pork price through 2018

* March pigs-per-litter record high

* Report neutral for hog futures on Friday

By Theopolis Waters

CHICAGO, March 30 (Reuters) - The U.S. hog herd in the December-February quarter grew 4.0 percent versus a year earlier, according to Thursday’s U.S. Department of Agriculture report, suggesting ample hog supplies ahead.

The result was slightly above analysts’ average forecasts and was the largest on record for the period. Analysts regarded the report as neutral because most of the results were close to forecasts.

They said farmers ramped up production to accommodate four new packing plants slated to come on line in 2017. A record number of baby piglets that survived during the quarter further fueled herd expansion.

The report suggests plentiful hog numbers ahead, which should help keep a lid on pork prices at the meat case through 2018, said analysts.

“The summer seasonal increase in pork prices is not going to change. But cheaper pork is still on the horizon for the next two years,” said Allendale Inc chief strategist Rich Nelson.

USDA’s report showed the U.S. hog herd as of March 1 at 104.0 percent of the year-ago level or 70.976 million head.

The result topped analysts’ average forecasts and was the most for the quarter since USDA began tabulating the March quarterly data series in 1988, according to Nelson.

Analysts, on average, expected 70.761 million head, or 103.9 percent of the year-earlier herd.

The U.S. breeding herd was 101.0 percent of the year-ago level, at 6.068 million head, up from 5.980 million last year.

The average trade forecast was 6.089 million or 101.8 percent of the previous year.

The March 1 supply of market-ready hogs for sale to packers was 104.0 percent of a year earlier at 64.908 million head, an increase from 62.144 million last year. Analysts, on average, looked for a 4.0 percent rise, or 64.648 million.

Record March 1 pigs per litter at 10.43 suggests consistent industry improvement in saving pigs that are born, said U.S. Commodities President Don Roose, referring to hog herd growth. Four new plants planned for this year imply increased capacity, which means more hogs are needed, he said.

Roose suggests keeping an eye on pork exports that he said will be needed to absorb the extra hogs entering the pipeline.

Analysts viewed Thursday’s report as generally neutral for Chicago Mercantile Exchange lean hog futures, depending on how much of it had already been factored in to the market. (Editing by Matthew Lewis)

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