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Pig virus shrinks March-May hog herd more than expected

Pigs
Pigs

By Theopolis Waters

(Reuters) - The U.S. hog herd shrank more than anticipated in the March-May quarter as a deadly pig virus swept through farms, a U.S. Department of Agriculture report showed on Friday.

The data also showed that despite higher hog prices in the wake of the deadly Porcine Epidemic Diarrhea virus (PEDv), producers had not expanded herds as much as expected, analysts said.

USDA's data suggest hog numbers will remain tight through the rest of the year, sustaining already high prices for hogs and pork during the period, said analysts.

They added that Chicago Mercantile Exchange hog futures could climb as much as their 3-cents per lb daily price limit on Monday, based on Friday's report.

The USDA report showed the U.S. hog herd as of June 1 at 95 percent of the year-ago level, at 62.128 million head. Analysts, on average, expected 63.200 million head, or 97.1 percent of the year-earlier herd. The U.S. hog herd for the same period last year was 65.188 million head.

The hog herd as of June 1 was the smallest for the period since the 61.701 million head in 2006.

The U.S. breeding herd was 100.0 percent of the year ago level, at 5.855 million head, compared with average trade expectations for 101.8 percent, or 5.990 million. A year ago the breeding herd was 5.884 million head.

"The report overall has a bullish slant because we thought high-priced hogs and cheap grain made producers profitable enough to expand herds, which was not the case," said U.S. Commodities Inc analyst Don Roose.

Still, the ingredients are in place with respect to profitability to drive herd expansion in 2015, he said.

Ron Plain, a University of Missouri economist, attributed the unexpectedly restrained breeding herd result to possible reluctance by farmers to increase production given uncertainty about how to curb or control the virus spread.

Analysts estimated that 8 million pigs have died from PEDv since it was first detected in the country a year ago.

Dan Vaught, an economist with Doane Advisory Services, said producers may have diverted only a minimum number of young female pigs to the breeding herd rather then send them to slaughter.

The June 1 supply of market-ready hogs for sale to packers was 95 percent of a year earlier at 56.273 million head. Analysts, on average, expected a 3.2 percent decline, or 57.310 million. Last spring's market hog supply was 59.304 million head.

The data showed 9.78 pigs per litter during the period, or 95.0 percent of the 10.31 in the year-ago period. Analysts expected an average 9.8 head.

"The pigs per litter figure indicates we're continuing to struggle with PEDv, so that's likely to keep inventories down and gives us a bullish outlook for the rest of this year," said Plain.

(Reporting by Theopolis Waters; Editing by Dan Grebler and Richard Chang)

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