Friday, when USDA releases the December Hogs and Pigs Report, market analysts expect to see expansion by U.S. pork producers as record-high hog prices and robust export markets put the industry on track for a second consecutive year of profits. Analyst Dan Vaught looks for the breeding herd number to be 0.8 percent higher than one year earlier. Farrowing from December through February will probably rise about 0.6 percent and farrowing intentions for March through May are expected to rise 0.8 percent.
Vaught, who runs Vaught Futures Insights in Altus, Arkansas, says – it’s rather clear the industry is involved in a moderate expansionary trend. According to Vaught, the projected increases reflect – the extreme height to which hog prices climbed during summer. Despite greatly inflated feed costs, Vaught thinks the promise of strong returns prompted farmers to hold back a few more gilts for breeding than they had previously stated they would. Hog prices climbed this year in part because China, South Korea and other countries sharply increased purchases of U.S. pork. Through mid-December, lean-hog futures traded on CME Group in Chicago averaged about 90.7 cents a pound carcass weight, up 20 percent from 2010’s average. In August, lean hog futures topped $1.06 per pound carcass weight, an all-time high for the CME contract.