A bounce in Chicago hog prices may prove short-lived, with a US report on Friday unlikely to show that pig farmers have cut animal numbers enough to solve the market's problem of excess supply, a leading analyst has said.

Traders are expecting Washington's quarterly Hogs and Pigs report to show a cut of 1.8-3.4% in numbers of breeding stock, with the total herd down by 1.0-2.4%, according to a poll for Reuters, the news agency.

However, these cuts, prompted by a lingering slump in the US pig industry, may be inadequate to pave the way for a match in supply and demand next year, Terry Roggensack at the Hightower Report said.

"There does not appear to be much confidence that the hog supply is down enough," he said.

Seasonal decline

That would pave the way for hog prices, which jumped 2.7% in Chicago on Wednesday, to succumb to a seasonal pattern of autumn declines.

"For some reason, the market has not priced-in the strong seasonal tendency for cash hogs to decline into the fall which leaves plenty of room on the downside for a break," Mr Roggensack said.

The comments chime with those in a US Department of Agriculture report last week which forecast that "hog prices will likely remain significantly below year-ago levels for the balance of 2009 as the year advances toward the fourth quarter—the period where production accelerates and prices typically achieve their lows for the year".

'Pinched margins' 

Other headwinds facing hog prices include data showing that cold storage of pork in the US hit 517.94m pounds last month, a record for August, if 4% lower than the July figure.

Supplies look set to increase further as the higher slaughter rates, inherent in herd reductions, "leave the market in a position to have to absorb higher and higher weekly pork production into November", Mr Roggensack said.

The pork cut out value, an indexed value of the main pig meats, fell to $54.63 per hundredweight on Wednesday, down $1.76 on the day and from $2.13 on the week.

"This could help pinch packer margins and help pull cash hogs lower next week," Mr Roggensack said.

Chicago hog prices have recovered about 15% from multi-year lows reached in August, hurt by a glut in supply exacerbated by the impact of so-called swine flu on exports and domestic demand.