* Pig virus offsets U.S. hog herd expansion
* USDA report seen bullish for CME hogs Monday (Adds analysts' comments, background on pork production, CME futures prices)
The U.S. hog herd fell by 1 percent in the latest quarter, slightly more than forecast, U.S. government data showed on Friday, as a deadly swine virus thwarted pork producers' efforts to rebuild herds.
"This confirms that PED is in the nation's hog herd, which was not shown nor implied in their previous report (September)," Rich Nelson, chief strategist at Allendale Inc, said after seeing USDA's lower hog numbers on Friday.
The U.S. Department of Agriculture (USDA) on Friday reported the U.S. hog herd as of Dec. 1 at 99 percent of a year ago, or 65.940 million head. Analysts, on average, expected 66.307 million head, or 99.9 percent of a year earlier. The U.S. hog herd for the same period last year was 66.374 million head.
The quarterly report was the first to show a noticeable drop in hog numbers, which analysts attributed to Porcine Epidemic Diarrhea virus (PEDv), reinforcing expectations that herds will shrink as the industry struggles to develop vaccines to treat the virus that has killed thousands of young pigs across 20 states.
The virus outbreak was largely undetected in USDA's September survey.
In Friday's report, hog numbers in all of the three major categories used by traders and producers as an insight into the state of the market - all hogs and pigs (or inventory), breeding and marketing - came in under expectations.