Hog Futures Have Worst Week Ever on Stubbornly Large U.S. Herd

(Bloomberg) -- Hog and pork prices have plunged since the release of data showing the biggest-ever U.S. pig herd and as the coronavirus outbreak keeps schools and restaurants closed.

Chicago lean hog futures slumped 25% this week, the biggest such loss ever. The drop surpassed the worst losses from 1998, when the U.S. hog industry also was dealing with a glut.

​American hog producers have been snake-bit by bad news in the past two years. Just after the trade dispute broke out between the U.S. and China in mid-2018, a deadly outbreak of African swine fever decimated the Chinese herd. But while the Asian nation imported record amounts of meat, only a relatively small portion was supplied by the U.S. due to import tariffs.

By the time the two countries signed the first phase of an agreement in January, coronavirus was starting to upend the Chinese economy, limiting purchases of U.S. meat. And now, the pandemic threatens domestic demand for American pork.

Some hog producers are trying to rein in supply amid the tough economic conditions. As of March 1, there was a record 77.6 million hogs. But the data also showed producers intended to raise fewer pigs later this year. The number of sows giving birth in the top hog state of Iowa was expected to decline by 4% in the current quarter, according to the U.S. Department of Agriculture.

“That is a stunning change which reflects the lack of optimism from producers about hog prices for the remainder of this year,” said Dan Norcini, an independent livestock trader in Coeur d’Alene, Idaho.

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