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Veteran Advisor

Is you're operation prepared for a second wave?

Hello, as some of you know I haul hogs for a living. I just wanted to share a few things I have noticed while out on the road during COVID. First off it's been a frustrating time for agriculture as a whole, that includes us in the agricultural trucking industry. For me, it's been hurry up and get these hogs to market before the plants shutdown. During the worst of the outbreak we increased number of head per load, we stocked finishing barns at higher populations, and started hauling in hogs to market at lighter weights to stay ahead. So far it has been working, the operation that I haul for hasn't had to euthanize market hogs on a large scale. They have however euthanized fall back animals, or pigs that won't make a good finishing weight because plants that kill those animals are either shut down or the cost of feeding those animals is more than the animal is worth. So between hauling more pigs to market per load and the euthanasia of fall back animals I have had less overall loads, so less money in my pocket for now. I can't predict the future, will COVID mutate into a lesser form over the summer? Will a second wave be stronger this winter? Could another more serious disease be in our future? Who knows, here are a couple ways I see as possible ways to manage risk going foreword. 

Plant diversity- If you normally send all of your market hogs to one plant, maybe consider making contracts with an additional plant.  

Keep market weights reasonable- If you are shooting for finishing 310 pound market hogs, maybe you should be shooting for 290 instead, just to give you some flexibility in case a plant closes.

Most producers are probably already doing these things. Just sharing what Im seeing in the hog industry from the cab of my truck. 

 

5 Replies
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Honored Advisor

Re: Is you're operation prepared for a second wave?

Blacksand, I think this could be curtains for the "large scale" independent hog farm that owns the animals that they feed.  If you custom feed, then there`s a loss of performance premiums or going a period with possibly empty pens.

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Senior Advisor

Re: Is you're operation prepared for a second wave?

I don’t think plants are going to close again come he’ll or high water. We’ve already made it clear what we think about Those People vs. The Industry and meat on the shelves.

I haven’t kept track of what all financial assistance is available to producers but I think there are at least a couple routes.

Don’t recall $30 summer hogs even in the late 90s bloodbath and COP was a lot lower then.

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Honored Advisor

Re: Is you're operation prepared for a second wave?

What is the cash hog price anymore?  I raise hogs and probably couldn`t guess within $5.  Markets on the radio mostly give the futures, any market report including cash is usually "No market report on hogs due to lack of volume and confidentiality".  I recall cash hogs being 8¢ a pound in 1994 others swear it was 1998.  My scarred recollection is that it was 8¢ in `94 and 20¢ in `98  and the `Fahrenheit 451` history books on the internet don`t say much on the 1990s hog price bloodbath. 

But the farmer that custom feeds hogs for a company that markets 500,000 hogs/yr isn`t going to be as affected as he was in the 90s with 8¢ hogs.  However before he signs the agreement to buy the new 2020 Silverado, he better anticipate that perhaps premiums for performance will be less and a chance that there will be periods of his barns being half full at times.

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Advisor

Re: Is you're operation prepared for a second wave?

It was ‘98. We kept the receipts.

Prices:

https://www.ams.usda.gov/mnreports/lsddhps.pdf

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Honored Advisor

Re: Is you're operation prepared for a second wave?

The small independents and by small I mean anyone without a contract are going to be the first one`s without a chair when the music stops.  20¢ hogs in `94 and 8¢ hogs in `98 and euthanized hogs in 2020...just goes to show it can always go lower.

https://www.nationalhogfarmer.com/marketing/slaughter-projections-will-test-packer-capacities  

 

snip from 2012 issue:

Current Capacities

A quick phone survey of packers who were not too keen on sharing capacity data confirmed economists’ suspicions. Things got very tight in November 1994. Saturday slaughter runs soared. Hog prices dipped into the mid-$20s on a liveweight basis for the first time since 1980. Little did we know that the fall of 1994 was child’s play compared to what lurked ahead in the fall of ’98, when prices would fall below $8/cwt. and producers exited the industry in droves.

Born of this situation was my periodic effort to keep track of U.S. packing capacity.

This spring, I have posed the packer capacity question on several occasions. Getting a handle on packing capacity in the fall was much easier, but remains troubling — if not for this fall, then certainly for the fall of 2013.

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