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Processing shutdowns continue to pressure supply chain

A livestock market economist says pressure is mounting on the supply chain as the number of COVID-19 related shutdowns at packing plants continues to rise.

University of Missouri’s Scott Brown says that’s not likely to change anytime soon.  “We’re seeing a 20 percent or so decline in that average daily rate,” he says.  “If we were to level out there, I think we’re okay.  I’m just worried that we’re going to see more plant closures as we move forward as COVID-19 seems to be impacting some of the other plants as well.”

Brown says the market could quickly move back to a situation where producer prices are declining while wholesale prices move higher.

He tells Brownfield it isn’t a sustainable model for the supply chain, especially on the hog side.  “We can’t live forever with us slowing down that chain speed too much without creating some real backlog,” he says.  “You look at feeder pig prices again (this week) they continue to be very low.  I think I saw a range of $1 to $7 per pig for early-weaned pigs.”

Last week K-State economist Glynn Tonsor said cattle slaughter was down about 8 percent from the previous week and hog slaughter had declined more than 13 percent.

On Monday, JBS announced it was shuttering its Worthington, Minnesota pork processing facility indefinitely.  The plant employs about 2,000 people and processes about 20,000 hogs per day. 

Brown made his comments during Brownfield’s Weekly Livestock Market Update.  For more breakdown and analysis of the livestock markets, sign up for the program HERE.