Producers need to take advantage of the margin opportunities out into 2021 that this rally has provided, says Dave Bauer, Provimi senior market analyst

October 23, 2020

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Pork packers this week passed another milestone by reaching a daily kill of 492,000 head on both Wednesday and Thursday. But it takes a big Saturday kill to make a run at a weekly number over 2.7 million head, says Dave Bauer, senior market analyst with Provimi, in this episode of Feedstuffs Precision Pork.

Although a couple of weeks ago, a 289,000 head kill on Saturday produced that 2.73 million head weekly run, Bauer notes that is difficult to sustain. As Steve Meyer said on this week’s Global Hog Industry Virtual Conference, if the packer runs his labor force too hard on Saturday, they aren't going to show up on Monday. So, the 96% capacity that the packers are pounding out each week might be close to the new normal.

The U.S. Department of Agriculture also released the September cold storage report this week, and instead of the three-year average of 2.5% growth in the August to September frozen pork supplies this year, we just saw a 0.25% increase. It would have been a 2% reduction, but USDA went back and revised downward the August inventory by 2.25% in the process. Speaking of revisions, USDA also revised August hams lower, but it wasn't due to fewer bone-in hams being processed. Bone-in hams were actually revised slightly higher, but the boneless hams were revised lower by 2.75%, suggesting potentially better rather than a lack of inventory.

Talk from Chinese officials that fourth quarter pork production will be up 30% over last year, just in time for their upcoming lunar new year holiday, may be something to keep an eye on.

What’s all this mean for profitability? Bauer explains.  

These are uncertain times and it will pay dividends to be well-prepared. If you have questions on this week’s recap or want to discuss something not covered, feel free to ASK DAVE at [email protected]. Plan today for tomorrow’s success.

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Follow Feedstuffs Precision Pork on your favorite podcast platform or find it on www.Feedstuffs.com and www.NationalHogFarmer.com

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