Sort & Cull

As seasoned pork producers are well aware, the government elves at NASS are not very good at wrapping Christmas presents. Most years they don't even try, belatedly kicking out the December Hogs & Pigs inventory like some kind of forgotten toy found in the back of Santa's workshop.

Yet for some reason (fear of government shutdown?) this year will be different. Scrooge-like enumerators have been barred from lockdown, paving the way for Rudolph and company to deliver the quarterly assessment of hog numbers as early as December 23.

This is the first time I can remember such a potential market-mover has actually found its way under the tree so early. Of course, as tantalizing as a big package with bright bows may be, there's no guarantee you'll be thrilled with how Uncle Sam shopped.

There's a lot riding on the quality of gift giving this year. Have producers traditionally responded to outstanding profits by aggressively hiking expansion plans? Or has the greedy bias of human nature been harnessed by the unhealed scars caused by the destructive force of PEDv?

No wonder hog managers, analysts and speculators can't help shaking the presents.

While I'm no better at such festive detective work than anyone else, I'll be shocked if the frantic unwrapping doesn't reveal at least light to moderate growth in the nation's breeding herd (i.e., up 1%-3%).

To be sure, the battle-hardened captains of the U.S. pork industry are more than capable of exercising prudence and rational caution. Yet these sorely tested soldiers are entrepreneurs before they are saints. The unique context of surging equity, the most manageable feed costs in years, and hedgable futures for as far as the eye can see represents a do-more invitation that not even Mother Theresa could decline.

But even if I've nailed the contents of the early Christmas present, the true significance of the gift may not be readily apparent. Some increase in the number of breeding sows and gilts will either be diluted or compounded by the exact level of PEDv-related death loss over the months ahead.

If litter size is seriously reduced once again this winter by this destructive disease, more sows on the floor could have marginal significance in terms of total commercial production. On the other hand, if the high curve of farrowing efficiency is largely regained this winter, the expansion blast suggested by the December 1 inventory will be nothing short of double-barreled.

Accordingly, when we tear into this anxiously anticipated package just before Christmas, you can expect to be excited/troubled by the same old question from your toy-loving childhood:

Are batteries included?

For more from John see www.feelofthemarket.com

(AG)