Weather weighs in with virus on U.S. hog weights

Chicago | Reuters — U.S. hogs have started to shed pounds after hitting record weights recently and the trend may continue with warmer weather, underpinning prices for market-ready hogs that have slid 15 per cent in 1-1/2 months from their all-time highs.

Hog weights rose to a record high 287.5 lbs. for the week of April 26 as farmers bulked up their animals to counter losses from porcine epidemic diarrhea virus (PEDv), an infectious agent that has killed roughly seven million pigs since it was first detected in the U.S. a year ago.

While the number of hogs slaughtered so far this year has fallen 4.2 per cent from a year ago, pork output has slipped only one per cent, largely because of heavier hogs.

For 2014, the U.S. Department of Agriculture has forecast a two per cent shortfall in pork production pegged to PEDv death losses. Others put that decline closer to seven per cent.

On Wednesday, USDA put the average live-weight hog in Iowa/Minnesota in the last week at 286.6 lbs. That was down 0.4 lb. from the week before but up 9.8 lbs. from a year earlier.

A 9.8-lb. bigger live hog yields a 7.35-lb. heavier carcass, resulting in 5.7 lbs. more pork in grocery stores, according to Ron Plain, a University of Missouri livestock economist.

It was the second week running that hog weights have come down, snapping a six-week stretch of record highs.

Now, traders are watching to see if pigs will lose pounds again this week when data is released on Wednesday (May 21), since the animals usually eat less in warm weather.

Hogs likely lost weight as spring temperatures rose in parts of the country, said Plain.

“Pigs don’t grow as fast in warmer weather. Seasonally, that’s what you have to expect from now through the middle of August,” he said.

There is a chance a cool spell in the U.S. Midwest this week might cause hog weights to spike briefly before they start to trend lower, he added.

Bullish investors are also betting on a sharp decline in hog slaughter from PEDv within the next few weeks, with the greatest impact expected during the high temperatures of July, said Dan Norcini, an independent livestock futures trader.

“We need to see these slaughter numbers actually confirm expectations or futures are overpriced,” said Norcini.

Chicago Mercantile Exchange hog futures spiked to an all-time high of 128.775 cents/lb. on April 2, driven by speculation PEDv would crimp supplies beginning in early spring.

Futures have since retreated to a recent low of 112.4 cents as the carcass price for market-ready, or cash, hogs slid from a record-high $127.30 per hundredweight on March 27 to roughly $108 now.

“Apparently, the heavyweight hogs and the lack of a real impact yet from the PEDv virus is allowing packers the luxury of cracking the cash hog market,” said Norcini.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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