U.S. hog producers are very good at what they do. Maybe too good.
This year has taught the industry just how tightly the pork supply chain operates, and as with any chain, if even a single link is stressed too much, the entire chain can become useless.
COVID-induced plant shutdowns coincided with a time when U.S. producers were doing what they do best — produce hogs to supply pork for a domestic and global market that by all means should be hungering for pork. African swine fever continued to decimate the hog population in China and other infected countries, meaning the U.S. producer should be able to supply those markets with our pork.
Then COVID-19 hit the United States, slaughter and processing plants closed, and producers started to either slow down the growth of their hogs or started to depopulate their herds with nowhere to go. Hogs were, and still are, backing up on farms, but to what extent is a guess. 1 million? 1.5 million? 2 million? 2.5 million?
Regardless, there is still a large supply of hogs on farms, and the lingering COVID-19 impact on the slaughter plants has led some industry leaders to question if now is the time to start curtailing hog production. Every year there is industry attrition, but with this year's current price situation and the overall atmosphere, we may see even more.
I wonder if some of those who do decide to exit the industry this year may base their decision on emotion rather than on the price situation. So much has been said of the emotional strain that producers went through as they were forced to euthanize market hogs. Maybe they saw that this whole COVID-induced shut down could occur again, and they just couldn’t stand to live through another round.
No doubt, 2020 has definitely been a dark cloud. But, as they say, every dark cloud has a silver lining, and that silver lining may be coming as soon as the fourth quarter of this year.
With the numbers presented in the most recent Hogs and Pigs Report, released Thursday, market analysts say prices could be up as much as $11 per hundredweight, and that could continue into 2021, before settling down again in the fourth quarter of 2021.
That's good news for the U.S. pork industry, and for its producers. At least for those who stick around to ride out the roller-coaster ride that it can be.