EDITOR'S NOTE: The Linn Group, which partners with Farm Futures for the Farm Futures Market Center provides weekly in-depth reports on key industry areas. The livestock report from John Ginzel, the Linn Group, offers you a look at key factors impacting this important market segment.
The September Hogs and Pigs Inventory report is seen as bullish due to a smaller Market Hog inventory than the trade's pre-report expectations. The February 2013 through the summer months will likely find good support from this report. The "Avalanche of Pork" likely will be moderating in coming weeks as the lighter weight groups of market hogs become market ready.
Apparently effects from the "Great Drought of 2012" are showing up by reducing the Breeding herd size and with scaled back farrowing intentions. Additional effects from the Drought are expected to be seen in the upcoming quarterly USDA's Hogs and Pigs Inventory reports. Friday's USDA's Grain stocks report gave a BULLISH push to the Corn futures market, locking Corn limit up during the session with strong gains seen for Soybeans. Hog producers should expect continuing elevated hog feeding costs for the next several quarters. Breeding herd liquidation pressure is expected to continue depending how high Corn and Soybean meal prices go in coming months.
The Pig crop was quite close to the trades pre-report expectations with the Pigs/Litter continuing to trend higher. Farrowing intentions were below year earlier levels. Given the higher Corn and Soybean prices developing, it is likely Hog producers could easily scale back Dec-Feb Farrowing intentions below the indicated levels since many of the sows and gilts are not yet breed for this time period.
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