Quicker-than-expected expansion of U.S. hog herd.

A quick glance at the data tells you the U.S. hog herd is expanding at a quicker-than-expected pace. As has been the trend, a bigger percentage of the inventory is hogs kept for marketing. Reason: The efficiency of farrowing operations continues to climb with the number of pigs per litter up another 1% from year-earlier levels.

This increased efficiency is putting more hogs in finishing units despite a relatively "lackluster" expansion of the breeding herd. That also explains why June-August farrowings were up 3% from year-ago, but the June-August pig crop was up 4% from last year.

Based on the weight breakdown of the market hog inventory, slaughter will run 3% above year-ago into the end of the year. That's plenty of pork for the market to absorb, likely keeping prices under pressure.

Why is expansion running so "hot?" Well... it's not the independent hog producer that's expanding. Contract production continues to expand... and the availability of new contracts from hog companies is bringing new hog finishers into the business every year. Many of these new producers are first and foremost corn and soybean growers. But, the attraction of a "steady paycheck" from finishing hogs and the availability of "cheap" fertilizer is turning more and more "crop farmers" back into "hog farmers," too.

USDA Sept. 1 Quarterly H&P Report

                      USDA actual  Avg. trade guess
                         (percent of year-ago)

Inventory

All H&P                      103%            102.1%
Breeding                     101%            100.8%
Marketing                    103%            102.3%

Pig Crop

June-August                  104%            102.3%
Pigs/litter                  101%            100.7%

Farrowings
June-August                  103%            101.6%

Farrowing Intentions

Sept.-Nov.                   101%            101.0%
Dec.-Feb.                    101%            101.1%

Market hog inventory

Under 60 lbs.                103%            102.1%
60 to 119 lbs.               103%            102.2%
120 to 179 lbs.              103%            102.4%
180 lbs. and over            103%            103.3%