Price, demand, location, supply, and COVID-19 keep analysts, producers, and suppliers on their toes and sometimes off, too.
Tyler Fulton, the Director of Risk Management with Hams Marketing Services, said shifting pork demand, due to COVID-19, makes it extremely difficult to assess the role of demand in influencing the value of live slaughter hogs.
Reductions in the U.S. hog processing capacity due to COVID-19 combined with dramatically reduced foodservice demand for pork due to the closure of restaurants resulted in a crash in the market for live hogs.
Fulton said the role demand would play in revitalizing the market is more complex and will be difficult to assess even when the data improves in two months.
“When you factor in the restaurant business cut in half, in terms of the volume of sales through that channel,” he said. “But you also can adjust for an uptick in strong export demand and all of that within the context of strong at domestic home consumption; it’s tough to get a handle on what the demand curve looks like.”
Fulton said the main focus is on removing the barriers in moving that product. For example, it is ensuring that the grocery channel is going at high speed and high capacity. It’s going to be significantly higher capacity than what it is typically merely because more people are eating at home and the same on the export side. With such a significant reduction in the production side, how the demand responds to that is a whole other level.
He said it’s challenging in real-time to understand what is having the most significant impact on the live hog price, the demand related aspects or the production side.
Dr. Steve Meyer, an economist with Kerns and Associates, expects the economic pressure to fluctuate and get worse before it gets better. This is a demand disruption piled on top of ample supply satiation with a roadblock thrown in.
Meyer said the first thing that happened, the shelter in place with safety precautions taken all over the United States and Canada, reducing foodservice demand dramatically. Retail demand is outstanding because people buy more products through grocery stores, but it isn’t easy to shift between those two.

“The best example is bacon, our darling for the last few years because of its use as food service,” he said. “Those lines that produce foodservice bacon, that product coming out of those lines, looks very different from the product that goes into our grocery stores. You don’t just flip the switch and go from food service to retail.”
The foodservice operation side is hurting; the retail side is hurting because of a lack of stock in the U.S.
“If you walk into an empty meat case, there’s no way to generate sales out of that rascal,” said Meyer.
The producer hurts by these low prices early on and mostly fluctuating and the fact the hogs didn’t move to market. There very well could be either market hogs or the weaned pigs following them into a barn that will get destroyed. That represents a colossal loss, and, because of the loss of foodservice demand, packers have struggled and in many cases closed plants completely.
Dr. Meyer said, “Once we get to the backside of cases, there’s going to be a huge demand for pork, but it’s a question of can you get there?”
Some producers with strong balance sheets will come through this OK but others who are weak and will probably go out of business. •
— By Harry Siemens