The chairman of the board of Tyson Foods, John Tyson says the food supply chain is breaking. The statement comes amid the closing of processing facilities, creating an even larger roadblock for animals that would be heading to market in a normal world. But now the livestock industries are talking about depopulating. There are plenty of animals but fewer places for them to be processed.
Indiana analyst Bob Utterback says the cattle and hog industries are in a precarious situation with the demand dilemma, and there is no magic bullet response when facilities are closing for workforce COVID-19 testing.
“I think in the next six months we’re going to go through a period of time when there’s more downside risk,” he said. “And eventually it will drive producers out of production in the hog and cattle sector and set the stage, probably by the summer of 2022, for one of the biggest bull markets in the history of commodities in corn, soybeans and wheat if we can dovetail it with weather. Long term I become very optimistic because we’re going to do such damage between now and the fall of 2021, but unfortunately it’s not a recovery next month, or two months, or even six months from now.”
He feels there is a 6-8-month time period that will be very damaging for the meat industry. His suggestion is to get rid of inventory as fast as possible. Utterback says the economy will likely be slow to recover, and that recovery will only materialize with improved confidence that going out and living life is safe.
“Until we get a vaccination that everybody can essentially go out and not be worried about getting sick, I think everything is going to be pretty much on pause and demand growth will be very, very limited,” Utterback told HAT. “The recourse for most producers is batten down the hatches, reduce your supply as much as you can. This is a time I would be cutting back on gilt farrowings and reduce my physical numbers because every hog you’re going to be selling at a loss, or every calf you’re going to be selling at a loss.”
Both Indiana Packers Corporation in Delphi and Tyson Foods in Logansport have announced temporary shutdowns of their facilities.
Utterback is with Utterback Marketing Services.