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Sunday September 28th , 2003 

On Friday after the livestock close the USDA released it's All Important Quarterly Hog and Pig report. 
Newswires and traders are calling the report mildly bearish. 

Last week wholesale pork , cash hogs and  futures acted sluggish  and slipped most of the week. 
This is typical , on a seasonal basis  the pigs make a bottom during November to December. The nearby  October contract experienced  larger losses than the back end of the market as traders sold off longs and / or  Rolled positions to December and back..  T
aking  into consideration last weeks sell-off when trading resumes Monday it may be rather wide and range bound .

However, the USDA supplied some interesting figures outside the main categories of the report.
--Traders should stay tuned for flashes and updates ---

    According to the USDA 'all hogs and pigs'  as of Sept.1  were 98%
of last year, compared with the  average street guess  97.4% from a range of 97.0% to 98.9%...
The USDA  did not  revise it's June Report.  Which  points to more  hogs showing up after early June rather than before. Basically confirming increased tonnage from Canada. Which is 'putting the pedal to metal'  on it's hog exports in the wake of the ban on beef.. The result is a larger than expected  herd (percentage difference from last year).

Producers have been cutting back on sow inventories for a while now and that is obviously waning. High cattle prices since late June apparently encouraged  hog producers to slow liquidation of sows and retain a bit more gilts than expected.  The USDA 'Hogs kept for breeding ' number was  97.% ,  compared with the average guesstimate 96.9% from a range of  95.2% to 98%..'Hogs kept for marketing'  was 98.% compared with the average estimate at 97.5% from a range of 96.9% to 99.1%...

    The interesting part of the USDA report is apparent when slicing past the headline categories and  looking at the  sub-categories.  In the report the USDA 'estimate for Hogs weighing 60 to 119 pounds was 99%,  compared with the average guess of 97.6 from a range of 96 to 99.6.
  The figure for 'hogs under 60 pounds ' also came in at 99% versus the street estimate of 97.9.  

Both of these were on the high side and may
pressure  the December and February contracts.  As for October Hogs , it is trading at a discount to the 2 day cash  index, which  in itself is supportive only if the index stays where it is at or rises..

    Farrowing  intentions (expected newborn pigs ) which came in at the high end of forecasts and show a rise through time( check the table below )  indicates an industry that may be looking at a bit of expansion. 
As previously mentioned in the Corn section of the last Bi-weekly this is somewhat supportive in the big picture for corn if it continues. 

      --After all,  a hog is simply refined corn--.

ALL in ALL.. .the 'kept for market 'hog inventory and data for ' Hogs under 119 pounds' suggests that there are a lot of pigs coming to slaughter the rest of this year.  Which may lead to some bearishness  for Bellies down the road.  The bacon market is trying to contend with a ever so slight drop in usage from restaurants.  A minor reversal of a trend that began in the mid 1990's when bacon prices were generally lower.   The change is slight but may be enough to stifle prices a bit.   As both large chains and small establishments attempt to improve productivity while contending with high beef prices and in some areas a slight drop in seated patrons due to smoking laws. 

No change in the short belly posture for now,  stay tuned for flashes and updates..

Happy Trading !!
Sunday September 28th , 2003
9:00 PM

                                                            Average         Range
                       USDA Estimates

Headline Categories:
All hogs and pigs on Sept 1       98.0          97.4   97.0- 98.9

Kept for breeding                        97.0          96.9    95.2- 98.0

Kept for marketing                      98.0          97.5    96.9- 99.1

Jun-Aug pig crop                      98.0           97.1    96.3- 98.0

Jun-Aug pigs per litter             100.0         100.0    98.8-100.3

Jun-Aug farrowings                    98.0           97.1      96.2- 98.0

Sep-Nov farrowing intentions    99.0          97.8      97.6- 98.0

Dec-Feb farrowing intentions   100.0         98.5     97.5-100.0

Hogs weighing under 60 lbs      99.0           97.9     97.0-100.1

Hogs weighing 60 to 119 lbs     99.0           97.6     96.0- 99.6

Hogs weighing 120-179 lbs       98.0           98.0     97.0-100.4

Hogs weighing 180 and over     95.0           97.6      95.0-100.3