August 13, 2020

COVID-19 remains a threat to US swine prices into H2: AHDB

In an article by the Agriculture and Horticulture Development Board (AHDB) of the United Kingdom, the United States' National Pork Producers Council warned that if more disruption occurs at processing plants in the coming weeks or months due to COVID-19 worker infections, then "the number of hogs backed up on farms will swell precipitously." This does not bode well for US swine prices, according to Steve Meyer, an economist with Kerns & Associates.

While slaughter capacity in US processing plants has recovered significantly since the spring when as much as 40% was offline, it is thought that the industry "is still hovering around 5% idle capacity," and that "that loss is more or less permanent." Meyer expects the swine backlog to increase to as much as 1.6 million by the end of August and to 2.5 million by end 2020.

In addition, according to the United States Department of Agriculture (USDA), 63.66 million swine have been slaughtered in the first half of 2020, compared with 62.80 million for the same period in 2019. This includes over 180,000 more sows, which could hinder further growth in the coming years.

For US exports of fresh and frozen pork, numbers are strong over the first half of 2020, rising 35% year-on-year to 1.24 million tonnes. In particular, exports to China more than tripled to nearly 450,000 tonnes, making up for falling exports to Japan and Mexico. A Reuters report earlier this week cited this increase to China: https://www.efeedlink.com/contents/08-12-2020/feb40b1f-1b8c-47c3-822e-3f2df3e6944d-0702.html