Smithfield Plant Shut-Down Earlier than Expected

US - Smithfield Foods, Inc.’s hog slaughter plant in Sioux City, Iowa, was mostly shut last week, city officials said, almost two weeks earlier than the closing date previously announced by the company.

14 April 2010

4 minute read

North America

The last slaughter day at the plant, part of Smithfield’s John Morrell & Co. division, was 8 April, the Sioux City Journal reported last week. There are now few signs of activity at the plant, Chris McGowan, who leads a local economic development authority, said yesterday.

“I drove by the plant (this morning) and the parking lot was nearly empty,” said Mr McGowan, executive vice president with the Siouxland Initiative, the economic development arm of the city’s Chamber of Commerce. “I didn’t see any indication of an operational pork facility.”

Smithfield representatives didn’t immediately respond to messages. In January, the company said it would close the Sioux City plant “effective 20 April.”

The Sioux City shutdown eliminates one of the larger buyers for pork producers in western Iowa, southwest Minnesota and other parts of the region. Weaker demand after the end of slaughtering may have pressured hog prices in recent days, analysts said.

Additionally, with about 1,450 workers, the plant was one of Sioux City’s largest employers, reports Pork Magazine.

Yesterday, prices for slaughter-ready hogs in the western half of the Midwest fell $1.85 to an average of $71.54 per hundredweight, on a carcass basis, according to USDA reports. Today’s price is down from $73.91 at the end of last week.

Cash hog prices in the western Midwest are still up from $68.87 at the end of last month and up from $63.89 at the end of last year, according to USDA data.

In late trading today, CME Group lean hog futures for delivery rose 0.375 cent to 76.75 cents a pound, after gaining 0.15 cent yesterday.

In a 20 January statement, Smithfield said the Sioux City plant is one of the “oldest, most outdated and least efficient” in the company’s system. br>
The Sioux City plant processed as many as 14,000 pigs per day, or about 3 per cent of nationwide capacity. Smithfield operates eight other slaughterhouses. The company’s total capacity, including Sioux City, is about 126,300 head a day.

Smithfield said in January it would shift some Sioux City production to three other company slaughterhouses in the region - plants in Sioux Falls, South Dakota, Denison, Iowa, and Crete, Nebraska.

Iowa State University agricultural economist John Lawrence, in a February report, said price impact from the Sioux City closing would probably be minimal.

With hog inventories down nationally, meatpackers need to bid more aggressively to secure enough slaughter-ready animals to run plants efficiently, Lawrence said.

Although the Sioux City closing will reduce hog demand in the region, there are seven other slaughter plants operated by five different companies within 100 miles of Sioux City, Lawrence said.

“While it's never good for a seller to lose a buyer, the reduction in packer capacity is expected to have a small negative impact on the (price) basis compared to what would have been had the plant remained open,” Professor Lawrence said in February.