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Some surprises in Friday’s USDA reports

A livestock marketing specialist says Friday’s Quarterly Hogs and Pigs report came in above pre-report estimates.

University of Missouri’s Scott Brown says the numbers were up in all categories.   “We have more market hogs than we thought and it is sitting about 2 percent higher than we were about a year ago in terms of inventory,” he says.  “If you look at pre-report estimates the average of those would have suggested we were up about six-tenths of a percent.  Breeding inventories are up about 1 percent relative to a year ago – and that’s also higher than we expected pre-report.”

He tells Brownfield the report implies there are more pigs than the market has expected.  “If all of that continues, I think we’ve set in motion for very ample supplies of hogs in the marketplace come the fourth quarter of 2016,” he says.  “Right now I kind of worry about some of the pressure we might see on hog prices as we move through the remainder of this year.”

USDA also released its cattle on feed report on Friday.

Brown says the total number of cattle on feed is up 10 percent for May.  “I think we continue to see a lot of heavier calves moving from wheat pasture that also helped push that number a little higher,” he says.  “We have more cattle coming.  If you look at on-feed, June 1 out of the report we continue this steady march of more cattle supplies.”

He says even in a good demand situation adding more supplies to the market puts added pressure on prices – and cattle producers could also see tighter margins later this year.