As we start the fourth quarter of 2021, let’s take a look back at what the hog industry went through this year. The year started off with a big commodity rally. What a dramatic change - first in grain prices and then a bit later in hog prices. Many ag sectors quickly saw significant improvement, not to mention margin calls that accompanied higher prices for those who locked in some coverage before the market run up. Demand for pork has been extremely high during the year due to strong domestic demand and export markets.
PRRS felt different this year. The incidence rate was somewhat higher overall, but the effects (impact) was much stronger. In discussions with many producers impacted by PRRS, we saw higher sow mortality and more frequent and severe breaks in finishing. This has had an impact on how much pork has been available to the market.
There were several other noteworthy items this year, including the ongoing global battle with African swine fever and its impact on the global protein complex that continues to be a hot topic. Domestically, the industry continues to wait to see if or how Proposition 12 will be implemented, as it’s scheduled to go into effect on January 1, 2022.
2021 has had its challenges, but overall, most producers have had a good opportunity, even with higher feed cost, in regards to return potential with improved markets.
As we look toward the future, there are some items on the horizon that remain in question: Will pork demand remain this robust? What will the pork supply look like in 2022 and going forward? Will there be growth? What is the health paradigm? Will this industry continue to have constraints due to labor challenges?
I encourage all producers to try to find some time after finishing up fall work to talk with your key decision makers and allied partners. Update your plans and strategy looking forward. Having a plan and executing will help you best position your operation and work towards your long-term goals.
Sources: Chris Murphy, Compeer Financial, who are solely responsible for the information provided, and wholly own the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.