Disease hits U.S. swine herd
Offsetting some of the near-term tightness in supply, market watchers see the nation's swine producers expanding their breeding herds, as feed costs have cooled considerably in the latest quarter.
The U.S. Department of Agriculture is scheduled to release its quarterly hogs and pigs inventory report Friday at 3 p.m. EDT (1900 GMT).
The average of seven analysts' estimates for all hogs and pigs as of Sept. 1 was 67.217 million head, down 1.4% from a year ago. Estimates for all hogs and pigs in the survey ranged from 3.6% below to 0.3% above the year-ago figure. The decline in the total number of hogs available this past quarter is likely due to death loss from porcine epidemic diarrhea virus, or PEDV, which began to spread in the early spring.
At the same time, with corn prices down to nearly half of what they were in September of last year, the trade sees many producers taking the opportunity to hold back as many of their sows, or adult female hogs, as possible, to expand thinned herds.
The estimates for animals kept for breeding, rather than sent to slaughter, averaged 1.5% above a year ago in a range from 0.6% to 2.0% above the same time last year. The average represents a breeding herd of about 5.875 million animals.
"The PED virus will run its course," said Tom Couch, manager of TKC Investments, a commodity-trading advisory firm in New Smyrna Beach, Fla. "And in the last two quarters of 2014, we're going to have more than an ample hog supply."
Mr. Crouch added that the cheap grain and the relatively high price for hogs right now is likely to make feeding more hogs profitable for the year to come. "I can see a situation where, when we get to the fall of next year, we might have a capacity problem, without enough shackle space to kill all the hogs" being marketed.
Analysts predict animals kept for marketing, or those to be fed for slaughter, will be 1.7% smaller than a year ago. The estimates ranged from down 4.1% to 0.2% above a year ago.
On average, analysts forecast the pig crop for June through August to be down 0.4% from last year. They expect farrowings, or successful pregnancies, during the period to be down about 0.2% from a year ago.
A greater than 3% range exists in analyst estimates for both the projected pig crop figure for June through August and the pigs-per-litter figure, projected to be flat with this time last year, illustrating the deep uncertainty about the number of young pigs lost to PEDV.
PEDV is widespread in many countries of Europe and Asia. It doesn't affect people, and isn't a food-safety concern, according to the American Association of Swine Veterinarians.
Cases of the virus reported to National Animal Health Laboratory Network and the USDA totaled 644 this week across 17 different states, but researchers said it's tough to tell how many hogs have been affected, as each case could represent thousands of pigs.
"We have very limited data right now. The number of pigs that have died cannot be extrapolated from diagnostic tests," said Montserrat Torremorell, a swine health researcher and professor at the University of Minnesota. "The outbreak in May could be just now hitting the market, or have an impact in the next couple of months. We know slaughter plants will be somewhat short in supply, but not how big of an impact PED will be."
Analysts expect farrowing intentions, or the number of sows to give birth, for the September through November period to be up 1.0% from a year ago while a gain of 1.1% is predicted for December through February farrowings. Pigs born from June through August would reach slaughter weight by December through mid-February of 2014, and those born from September through November would be available for processing in the spring.
Write to Kelsey Gee at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 26, 2013 12:16 ET (16:16 GMT)