H&P Report negative compared to pre-report expectations

USDA estimated the U.S. March 1 hog herd at 74.571 million head, up 435,000 head (0.6%) from both year-ago and the average pre-report estimate. The market hog inventory increased 566,000 head (0.8%) from year-ago, while the breeding herd declined 130,000 head (2.1%). The winter pig crop increased only 1.9%. While farrowings declined 2.6%, litter size jumped 4.6% to a record 11.53 head, as farrowing house efficiency continues to surge.

Market hog inventories were higher than expected in all but the heaviest category. Based on this data, slaughter should run steady to 1.5% above year-ago into fall.  

Looking forward, hog producers intend to farrow fewer sows in the next two quarters, with spring intentions down 0.9% and summer intentions down 1.7%. But if pigs per litter continue to mark record highs, the spring and summer pig crops would likely top the previous year.

USDA made notable revisions to past data. Those included: The Dec. 1, 2023 hog population was revised up 845,000 head to 75.816 million, with all of the increase coming in two pig weight categories. The number of hogs weighing 180 lbs. or over was revised up 485,000 head, while the number of pigs weighing between 50 and 119 lbs. was increased 360,000. The Sept. 1, 2023 population was revised up 810,000 head to 76.133 million head. The increase was confined to the three lighter-weight pig categories. Pigs weighing less than 50 lbs. were boosted 430,000 head; those weighting between 50 and 119 lbs. were increased 390,000 head; and those weighing between 120 and 179 lbs. were reduced 10,000 head.

Those changes reflected upward revisions to summer and fall 2023 sow farrowings and the resulting pig crops. Fall 2023 farrowings were boosted 15,000 head, with the fall pig crop rising 378,000 head. Summer 2023 farrowings increased 60,000 head, which translated into a 699,000-head jump in the pig crop.

With nearly every category above the average pre-report estimates, the report data is negative and will weigh on the market next Monday. But with markets closed on Friday, traders will have to wait an extra day, which may tame some of the bearishness by the time markets reopen.