Jim Long Pork Commentary: bad news becoming worse news

Bad news seems to be becoming worse news. Below some observations:
calendar icon 29 April 2020
clock icon 3 minute read

At the time of writing, hog slaughter plants closed: Tyson- Waterloo and Logansport; Smithfield- Sioux Falls; JBS- Worthington. Roughly combined 80,000 head per day capacity. Other plants are slowed down due to coronavirus labor-related issues. Last week the US harvested 1,995,000 head, probably 600,000 less than there needed to be.

Hogs are backing up at an unprecedented level.

Fewer hogs have led to US pork cut-outs rising at an unprecedented rate as shortage of pork is pushing hog prices higher. Last Friday, US pork cut-outs closed at $77.48. Ten days earlier they were $50.00, a jump of roughly $55 per head. Unfortunately, the hog price gained only about $6.00 per head and is 47₵ a lb.

For Packers that continue to operate, big gross packer margins. Plants that are closed are missing out and at same time paying all their employees not to work. Strange situation. One thing for sure, huge packer gross margins are a big incentive to keep and get plants operating.

US cattle slaughter plants are having similar issues with coronavirus and employees. Last week cattle numbers slaughtered 469,000. They should have been in the 625,000 range.

Chicken slaughter last week was 9 million less birds then same week a year ago.

Put Pork, Beef and Chicken together - huge meat tonnage decrease. At some point, real government intervention could be needed and soon, to keep food supply system operating and feeding people.

As the hog production system backs up with supply, we understand there are sow units inducing abortions and pigs being euthanized. The degree of these intervention points we are not sure. Early wean pigs are under $10.00 each. It is a mess!

US sow slaughter in March was 283,000, up from a year ago by 34,000 (+ 13 percent). Year to date up 66,000. No doubt there is breeding herd liquidation.

The US government has announced financial support to Ag for coronavirus related issues. For swine producers, it looks like a cap of $125,000 per entity. Many, if not all think this is insufficient support.

With hog losses for some at $40 per head, it appears to us that it will not do a lot for many. With 75 percent of US hogs concentrated in 40 producers, the $125,000 cap will do little to stop the bloody losses for that group.

It is sad when you watch the news and see thousands lined up to get food from food banks, while at the same time we cannot get hogs slaughtered. You wonder when the coronavirus testing in New York that shows at least 20 percent of people had coronavirus titres, how any slaughter plant employee profile can stay negative. It is an impossible task.

Jim Long

President - CEO at Genesus Genetics
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