by Ken Root & Whitney Flach
Listen Here: Agribusiness Matters 10-11-16
The Hog Business has consolidated to the point it appears to be predictable, but not necessarily profitable. Very large slaughter, relative to packer capacity was forecast last summer. Now it is coming true. This past week, massive hog slaughter numbers were reported. At 2.42 million head, hog slaughter is nearly six percent larger than 2015. Steve Meyer, who is the vice president of pork analysis for EMI Analytics, says packer capacity is being stressed.
“These numbers are running ahead of what are forecast had been. If that continues we will be in a real bind when it comes to November and December. Maybe we’ve been kind of been holding these weights steady and pulling to get some hogs sold, but obviously there are people concerned about lower prices yet to come. There is some incentive to do that. It isn’t going to get any better. If anyone thinks it is, that is wishful thinking. We need to get the hogs moved.
Meyer expects the packer capacity issue to be the biggest challenge in November and December. “We can push 5.6 or 5.7 workdays per week. However, you can’t do that very long though. The people in your plant get really tired, really fast.
Hog prices are expected to trade sideways, if not, lower during the fourth quarter. New packing plants are in the construction phase?but can?t offset the challenges of this cycle.
