The Director of Risk Management with HAMS Marketing Services says shifting pork demand, due to COVID-19, is making it extremely difficult to assess the role of demand in influencing the value of live slaughter hogs. Reductions in U.S. hog processing capacity due to COVID-19 combined with dramatically reduced food service demand for pork due to the closure of restaurants have resulted in a crash in the market for live hogs.
Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, observes the role demand will play in revitalising the market has become significantly more complex and will hard to assess even when we have better data in two moths time.
Clip-Tyler Fulton-HAMS Marketing Services:
Demand is always a difficult thing to really wrap your head around but, when you factor in the fact that the restaurant business has been cut in half, in terms of the volume of sales through that channel, but you also can adjust for an uptick in strong export demand and all of that within the context of strong at home domestic consumption, it's really difficult to get a handle on what the demand curve looks like.
I think it's fair to say that the main focus is simply on removing the barriers that there are to moving that product. For example ensuring that the grocery channel is going at a high speed, a high capacity.
It's going to be significantly higher capacity than what it normally is simply because more people are eating at home and the same on the export side.
But, when there's such a significant reduction in the production side, how the demand responds to that is a whole other level.
Source : Farmscape