Collective action could save hog farmers lots of money this fall. And
it doesn’t have to cost a dime.
If hog producers sell a few more pigs before August, and hold onto a
few into the winter, there won’t be much chance of a price collapse in
the fourth quarter.
That’s the message University of Missouri agricultural economist Ron
Plain is trying to get out to producers while there’s still time.
“For an individual hog producer it’s an inconsequential thing, but
Read Also
Canada-U.S. trade relationship called complex
Trade issues existed long before U.S. president Donald Trump and his on-again, off-again tariffs came along, said panelists at a policy summit last month.
something that could save him and all hog producers a lot of money.”
Every year hog marketings substantially increase in the
October-December fourth quarter. There can be a problem if supply
exceeds slaughter capacity in this quarter. A small excess of pigs
coming to market can cause prices to collapse, as happened with cat
astrophic effect in the fourth quarter of 1998.
Plain said packer capacity may be squeezed in the fourth quarter this
year, depending on the number of hogs in feeding barns right now. The
recent United States Department of Agriculture report on pigs suggests
there won’t be a dangerous glut of hogs in the fourth quarter, Plain
said. But USDA numbers have been wrong before, so producers should do
whatever they can now to protect themselves.
He suggests they push their hog sales forward by one day in the third
quarter and hold onto hogs for one extra day in the fourth quarter.
Each day’s cut of marketings will reduce pigs coming to market by 1.6
percent. If producers manage to sell more pigs in September and push
some December pigs into January, 3.2 percent fewer hogs will come to
market at the worst time, and the crisis can be safely averted.
Hogs marketed one day early will probably be two pounds lighter than
usual and those pushed into January will be two pounds heavier than
normal.
But that doesn’t mean producers will lose money, Plain said. Third
quarter prices are generally higher than fourth quarter prices, so
early pigs will be lighter but get slightly more per pound, so there
should be no net loss.
The January market should also be better than the December market,
making it cost-free to hang onto some pigs for one more day.
Plain said this is a sound idea, but the problem is making producers
aware in time to take action.
“We’ve talked about it a lot.”
Hog producers seem to support the idea.
“Most seem pretty interested and willing to try to do it,” he said.
Manitoba Agriculture livestock market analyst Janet Honey said packers’
inflexible demand for hogs means the fourth quarter will be
troublesome, even if production does not outstrip packer capacity.
Even a few days of excess pig shipments would cause a short-term price
drop.
“In any one particular week, if you get more than that magic number,
you’ll get suddenly lower prices.”
Manitoba doesn’t tend to have production surges in the fourth quarter,
Honey said. That’s because Manitoba hogs tend to come from large
operations that are less cyclical. But the prices Manitobans get for
their hogs are set by the U.S. market.
The American National Pork Producers Council thinks Canadians could be
part of a fourth quarter solution. Many packing plants in Canada are
running only a single shift. They could push production in the fourth
quarter by adding another shift.
Plain said his idea of increasing hog marketings in September and
delaying them in the fourth quarter “makes sense as an annual strategy.”
