The March 1 USDA Hogs and Pigs report came in much different than analysts expected. Analysts create estimates based on what the Hogs and Pigs report survey showed in the previous quarter.
“When the USDA makes revisions like they did, they do so because of the numbers that came to market,” explains Altin Kalo, chief economist at Steiner Consulting Group. “What the surveys said in September and December ended up being overly optimistic, and that’s why you had a miss.”
There are always revisions to the survey information, points out John Nalivka of Sterling Marketing, Inc. The Dec. 1 Hogs and Pigs Report released on Dec. 23, 2024, indicated the All Hogs and Pigs Inventory was 75.845 million head, up 1% from a year earlier. The Kept for Breeding category was 6.004 million head and even with a year earlier while the surveyed total of Market Hogs was indicated to be up 1% on the Dec. 1 report.
“The March 1 report indicated significant revisions to the inventory of market hogs from the number on that Dec. 1 report – a 940,000 head revision,” Nalivka says. “Percentage-wise, that may not seem large, but from the perspective of projected market hog supplies, it is.”
The 940,000 head difference in the two reports suggests if the Dec. 1 report was taken at face value, there was an opportunity for a critical forecasting error, Nalivka explains.
“Forecasts are not just forecasts in my business,” Nalivka says. “They are used for business decisions. The question then arises – who made the mistake - USDA or the analyst?”
Nalivka says he brings up the error in the Hogs and Pigs Report to illustrate potential problems that can occur when taking USDA surveys at face value and not adjusting projections using other information in addition to the surveys.
“I am not disparaging the USDA surveys, but rather how they are used,” Nalivka says. “They are not the end all to market analysis. They are one part of the analysis to project supply. The other part is demand and my perspective after 40 years of market analysis is that we need to bring more focus and analytics to that side of the equation — demand.”
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