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April 24, 2020, 4:39 p.m. EDT

Meat shortage looms as coronavirus shuts packing plants, leaving farmers with tough choices

Producers alter rations to slow growth, ponder euthanizing hogs

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By William Watts, MarketWatch

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Producers typically feed a series of four to five rations, Loy said, in a phone interview. By reverting to or maintaining rations that contain more hay and forage, as opposed to grains and other higher-energy feedstuffs, producers can cut the growth rate by around a quarter-pound a day.

Loy said in more extreme circumstances, producers could revert to rations that would slow growth to around 2 to 2 ½ pounds a day without affecting the quality of the meat. In the most extreme scenario, producers could feed a maintenance ration designed to keep cattle at a steady weight, but that would risk affecting the marbling and overall quality of meat, Loy said.

While feed is delivered each day to cattle on a feedlot, hogs typically are fed via self-feeders. While there are more options when it comes to lowering the energy in cattle rations, the best producers can do with hogs is to add some fiber-type feedstuffs, Loy noted.

Standard slaughter weight for cattle typically runs between 1,300 to 1,400 pounds, while the average hog slaughter weight runs between 280 and 290 pounds, according to the U.S. Department of Agriculture.

Herz said the Nebraska Cattlemen Association is working with packers in an effort to get them to curtail dockages for oversize animals in the wake of the plant closures and slowdowns.

The U.S. Department of Agriculture last week announced an aid program that included around $1.6 billion in direct relief for hog farmers and $5.1 billion in direct relief for cattle farmers, along with $3 billion in purchases of various agricultural commodities.

Producer groups have called the aid welcome but not enough to sustain many producers.

Meanwhile, the possibility of meat shortages — and rising consumer prices — offers a contrast to cattle and hog farmers who are operating with negative margins.

Indeed, live hog futures /zigman2/quotes/211758166/delayed LH.1 -0.18%  jumped 16% in the past week as traders reacted to plant closures, after hitting a 3 ½ year low on April 14. Hog futures remain down more than 28% in the year to date, while live cattle futures /zigman2/quotes/211763332/delayed LC.1 +0.05%  are off around 34% so far in 2020.

“The profit margins were gone a long time ago,” said Herz. The longer the backups persist, “the worse it gets.”

/zigman2/quotes/211758166/delayed
US : U.S.: CME
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Volume: 6,255
Sept. 24, 2020 3:15p
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/zigman2/quotes/211763332/delayed
US : U.S.: CME
108.08 ¢
+0.05 +0.05%
Volume: 9,518
Sept. 24, 2020 3:02p
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William Watts is MarketWatch's deputy markets editor, based in New York. Follow him on Twitter @wlwatts.

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