DES MOINES, Iowa — The USDA’s latest hog numbers offered some surprises, one of which is that U.S. producers are slowing herd expansion because of feed demand and supply not keeping pace with the current market, according to leading agricultural economists.

“It’s a relatively vanilla report,” said Joe Kerns, president of International Agribusiness Group, LLC in Ames, Iowa, on a June 29 conference call. “We can take a collective sigh of relief that the breeding herd (up 1 percent) was not a larger number.”

Kerns was joined by Chris Hurt, Purdue University extension agricultural economist, and Erica Rosa-Sanko, agricultural economist for the Livestock Marketing Information Center in Lakewood, Colo.

The June 1 USDA Quarterly Hogs & Pigs report is one of the first major reports released since the USDA announced last month plans to review changes in the release times of its key statistical reports, in light of recent changes in market trading hours by major commodity exchanges.

Sponsored by the pork checkoff, headquartered in Des Moines at the National Pork Board, the report said the U.S. inventory of all hogs and pigs on June 1 was 65.8 million head, an increase of 1 percent from June 1, 2011, and 1 percent from March 1, 2012. The report also said the U.S. breeding inventory, at 5.86 million head, was up 1 percent from last year, up 1 percent from the previous quarter and up about 1.4 percent from what traders expected, based on pre-report estimates.

“The increase could put some pressure on deferred contracts (immediately),” said Steve Meyer, president of Paragon Economics, Inc. in Des Moines, “but the next few weeks’ discussions will likely center on whether all of those animals will actually remain ‘kept for breeding’ given the sharp increase in costs that we have seen since June 15.”

Hurt said while the pork industry has remained stable for several years, feed demand and supply haven’t kept pace with the market.

“We really have to get a good North American crop just to keep us from running out of corn and soybeans,” he said. “Thank goodness (farmers) didn’t start the expansion process. From what we see today, we may have to cut this herd some, going forward.”

As the nation’s top hog producer, Iowa has 20.1 million hogs and pigs, the report said, which matches the total from September 2011, but is 2 percent higher than June 1, 2011, and March 1, 2012. U.S. market hog inventory, at 60 million head, was up 1 percent from last year and up 1 percent from last quarter, the report said.

The report stated the March-May pig crop, at 29.4 million head, was up 1 percent from 2011. Sows farrowing during this period totaled 2.92 million head, up slightly from 2011, and sows farrowed during this quarter represented 50 percent of the breeding herd.

Currently, the report said U.S. hog producers intend to have 2.9 million sows farrow during the June-August 2012 quarter, down 1 percent from the actual farrowings during the same period in 2011 and down 1 percent from 2010. The report also said U.S. intended farrowings for September-November 2012, at 2.89 million sows, are down 1 percent from 2011 but up slightly from 2010.

Iowa’s hog farmers, as of June 1, planned to farrow 480,000 head of sows and gilts in the June-August 2012 quarter, with farrowing intentions for the September-November period estimated at 480,000 head.

The average pigs saved per litter in Iowa was a record high 10.09 for the March-May period, the report added, compared to 10.03 last year. In addition, Iowa’s March-May 2012 pig crop was 5.04 million head, with a total of 485,000 sows farrowed with an average litter size of 10.4 pigs per sow.

According to a July 2 Dow Jones analysis, the USDA’s June 1 report could be considered “mildly bullish” for hog futures.

“That’s because the signs of producers restraining their production were collected prior to a recent two-week rally for corn futures,” the analysis stated, “which have shot upward at the Chicago Board of Trade due to signs a hot, dry heat wave across much of the Corn Belt is posing grave threats to the coming corn crop.”

With recent price rallies in the corn and soybean markets, Kerns estimated an $83-$85 per cwt. breakeven on a lean-carcass basis, based on Western Corn Belt prices. However, Hurt estimated carcass basis at $86-$87 per cwt. using Eastern Corn Belt pricing.

“This is a discouraging outlook, but not because of the Hogs & Pigs report and what producers have done with regard to herd size, but due to weather concerns and the 2012 corn and soybean crop,” he said. “If prices continue to rise, we’ll have to see herd liquidation going into 2013.”