COVID-19-related closures and production slowdowns of several hog processing facilities beginning in early April decreased processor demand for hogs and reduced weekly hog slaughter numbers, sending April 2020 hog prices down more than 35% below prices in April 2019.
According to the U.S. Department of Agriculture, as of late April, the closures comprised more than a third of the industry’s processing capacity.
“At the time of the first plant closing, pork demand was already low, as much of the hotel, restaurant and institutional sector had been shut down to block transmission of the virus,” USDA noted.
In 2020, between the weeks ending March 27 and April 24 (weeks 13 and 17 of the calendar year), prices fell $13/cwt. as plants took measures to protect processing plant workers from COVID-19, reducing the rates at which hogs were slaughtered. USDA reported that for the week ending April 24 (week 17), live hog prices averaged about $34/cwt., the second lowest weekly price since November 2016 and significantly below most hog producers’ breakeven price.
Average prices for the week ending April 24 moved about 5% higher than the previous week, which USDA said was likely attributable to rapidly increasing wholesale pork prices.
The wholesale pork cutout closed higher on May 7 at $116.74/cwt., up from $51.41 on April 9. Loins were at $137.82/cwt., up from $88.27, and hams were at $52.66/cwt., up from $32.95. Bellies have soared after hitting lows in early April, closing at $203.32/cwt. on May 7, up from $31.91 on April 9.