The U.S. hog market had crashed in March, first as restaurants in the U.S. closed to slow the spread of the coronavirus and then as workers at meat plants started catching Covid-19. Absent employees and companies taking safety precautions forced pork plants to shut down, resulting in a nearly 40% reduction in output of the meat by early May.
Hog farmers left without a market euthanized animals and adjusted feed rations to slow the rate of weight gain in herds. While there is no official count of how many hogs were culled, CoBank estimated as many as 7 million. Now, months after plants reopened, pork plants were bidding up prices to buy hogs from farmers, even before the news out of Germany.
“We had all of that liquidation taking place and no one ever quantified that,” Dan Norcini, independent hog trader in Idaho, said by phone. “I’m starting to wonder if the impact of the liquidation is being felt and then the German news came, and it was like a one-two punch.”
2020 will probably be remembered as a year of plagues. Early this year there was the plague of locusts making its way across northeast Africa, India and China. Then we had the swine flu which ravaged herds in China, Next, the COVID-19 pandemic closed down the global economy for the first time ever. Fires have also been making headlines in Australia, Brazil and more recently in the USA. This year has lumped a decade’s worth of volatility inducing events into only a few months so it is reasonable to question whether this volatility will lead to short or long-term trend changes.Click HERE to subscribe to Fuller Treacy Money Back to top