U.S. Pork Supply Surges as Hog Slaughter Climbs on Feed Costs

Pork inventories in the U.S. climbed 28 percent at the end of September from a year earlier to the highest in almost a century, the government said, as rising feed costs prompted producers to send more animals to slaughter.

Warehouses held 630.7 million pounds of pork, up from 491.9 million on Sept. 30, 2011, the U.S. Department of Agriculture said today in a report. The figure is the highest for the end of September since the USDA started tracking the figure in 1915. Inventories rose 7.7 percent from the end of August.

The price of corn, the main ingredient in livestock feed, jumped 18 percent this year before today, as the worst drought since 1956 damaged yield prospects. The USDA is projecting the smallest crop in six years. Meatpackers processed an estimated 89.211 million hogs this year through Oct. 20, up 2.1 percent from a year earlier, USDA data show. Feed costs are probably prompting producers to send animals to slaughter at an “accelerated pace,” Doug Houghton, an analyst at Brock Associates in Milwaukee, said in an interview before the report.

“Excessive September production very likely boosted pork stocks substantially,” Dan Vaught, the owner of Vaught Futures Insights in Altus, Arkansas, said in an e-mailed report.

Hog futures for December settlement fell 0.9 percent to 78.875 cents a pound at 12:54 p.m. on the Chicago Mercantile Exchange. Prices were down 5.5 percent this year through Oct. 19.

As of Sept. 30, stockpiles of pork bellies, which are cured and sliced to make bacon, rose 79 percent from a year earlier to 16.7 million pounds, according to today’s report. Warehouse supplies of ham surged 31 percent from a year earlier to 213.9 million pounds.

Chicken-meat inventories at the end of September were 2.7 percent smaller than a year earlier at 651.7 million pounds, the USDA said. Beef supplies fell 0.5 percent to 425.6 million pounds.

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.