Hog market throwing head fakes while we search for predictability
You may want to stay awake for the June Hogs and Pigs Report, released on June 25. The past several have been yawners.
Joseph Kerns, National Hog Farmer
Jun 22, 2020
Whether we like it or not, we are all creatures of habit who need and want predictable items in life to help us throughout our day. Where we put the car keys every night, what kind of coffee we prefer each morning, the dependability of a good dog and the solidarity of loving relationships are all examples of structure we seek and desire.
The same mantra holds true when we are navigating hog markets — we seek something as a solid known from which to base our opinions and adjust from there. Unfortunately, recently knowns are proving to be something less than reliable, but I think we have a reset coming in the form of this week's Hogs and Pigs Report.
Here is one thing I think I know for sure — there will be numerous utterances of, "no way", in the wake of the report, regardless of how the numbers play out on paper. There are simply too many moving variables and too many differing opinions to reach any consensus that we can all agree upon. Regardless of the feather-ruffling that will be in the wake of the report, they represent the best numbers we have as an industry and I believe it is prudent to not simply dismiss the data as irrelevant just because it does not fit my bias.
Let's take a look at some of our biases and how they may or may not serve us in this environment.
Hog weights: We have a nice, predictable seasonality of hog weights that, in normal times, are a pretty good indicator of how current our marketings are and give a key to how the available supply of market-ready hogs may look. Note in the chart below, we have seen a sharp spike lower in weights that is seemingly in contrast to the increase in weights that occurred in the wake of the COVID-related shutdown of packing plants.
Does this mean we have worked through the backlog of animals and are now current? We actually had decent packer interest in open market hogs last week. Are we in a better position than previously thought? I think this one falls in the head fake arena. Numerous conversations with several production systems would indicate that a combination of warm temperatures and the implementation of slow/no growth diets may have more to do with the shape of this graph rather than the industry being current.
Give our nutritionists credit: We asked them to mitigate growth, they responded with vigor. In my opinion, the 2.5(ish) million hogs that were backed up earlier in the year did not just go away, we have temporarily masked the reality of the situation and the hogs backed up in the barns will have to be dealt with, via marketings or other means.
Euthanasia: The dreaded word for my polite use of "or other means" in the last paragraph. Iowa did an excellent job, recently, by responding to the outcry from producers to do something, anything, to provide assistance in this tough economic environment.
The state responded with a reasonable and measured response by offering $40 per head for up to 600,000 animals that were believed to be backed up in the state. The subscription to this program has been underwhelming, to say the least. Roughly 10% of the gross volume has been nominated — could it be that there are not as many animals in distress to trigger more participation? I don't think that is the case, I think there is something else going on.
Namely, we call you pork producers because that is your chosen profession, the thought of euthanizing an otherwise healthy animal is beyond the scope of comprehension for most. This genetically-imprinted mindset of animal husbandry and combined with the heinous behavior of the activist crowd is enough tip the scale, in my opinion. To wit, the groups that are breaking civil laws (and disregarding the respect of fellow humans) with their illegal acts is working in one sense in that it is making the painful decision of market animal euthanizing even more difficult. That is the rationale behind the lack of more participation, not a flaw in the program or the lack of backed up animals. Our COVID environment means that those who break the laws are not arrested and detained for fear of human-health repercussions. Justice is not being done when the owners of operations are targeted, and their property rights violated. The animals are there, the motivation to hold onto them is more than the perceived pain of elimination.
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