USDA hog report confirms active herd growth as pig virus ease

By Theopolis Waters (Reuters) - The U.S. hog herd grew 7 percent during the December-February quarter versus the same period last year, a U.S. Department of Agriculture report showed on Friday, reflecting producer profitability and the less-severe pig virus, said analysts. Hog farmers willingly expanded their herds after vaccines and tighter biosecurity measures offset the Porcine Epidemic Diarrhea virus (PEDv) that wiped out an estimated 9 million pigs since May 2013, they said. The USDA report showed the U.S. hog herd as of March 1 at 107.0 percent of the year-ago level, at 65.934 million head, the largest total for that period since 66.718 in 2008. Analysts, on average, expected 65.676 million head, or 106.8 percent of the year-earlier herd. The U.S. breeding herd was 102.0 percent of the year-ago level, at 5.982 million head, compared with average trade expectations for 103.6 percent, or 6.062 million. The March 1 supply of market-ready hogs for sale to packers was 108.0 percent of a year earlier at 59.953 million head. Analysts, on average, expected a 7.2 percent increase, or 59.650 million. USDA's pigs per litter category, the most affected by the virus, was at 10.17 pigs during the winter period, or 107.0 percent of the 9.53 a year ago. The result topped the record for that period of 10.08 pigs in 2013. "The report is short-term bearish and long-term bullish," said University of Missouri economist Ron Plain. He cited the huge year-over-year jump in the market hog inventory result versus a smaller-than-expected breeding herd outcome. The market hog result was likely a result of more pigs that survived PEDv than anticipated, he said. Don Roose, an analyst with Iowa-based U.S. Commodities, said Friday's government data sent a signal that the industry is in "full blown" expansion mode. But, he said, that growth slowed down based on the surprising 2 percent decline in the June-August farrowing figure. Farrowings refer to the number of sows that are expected to give birth. Friday's USDA survey suggest plentiful supplies through the summer, which could pressure nearby Chicago Mercantile Exchange lean hog futures on Monday, analysts said. Deferred hog contracts could gain based on easing production beginning in late summer 2015, they said. "The key to the report is how much of it is dialed in after CME hog futures' dramatic selloff in recent weeks in anticipation of bearish data," said Roose. (Reporting by Theopolis Waters in Chicago)