Lean hog futures slumped on Tuesday after a new report suggests greater uncertainty in global pork markets. As the coronavirus pandemic continues to affect global supply chains, industry experts are sounding the alarm about output levels and the various challenges that could reshape the meat sector.
October lean hog futures slipped 0.30 cents, or 0.59%, to 50.45 cents per pound at 17:56 GMT on Tuesday on the CME. Lean hog prices have rebounded 4% this month, but they are down nearly 30% year-to-date.
Rabobank, a global agribusiness bank, modified its pork production forecast for 2020 in major producing markets in its quarterly update. The organization warned about adjustments to pork output due to perpetual disruptions in global supply chains, resulting in volatile global trading conditions over the next 12 months.
Analysts note that the global pork industry will face a myriad of challenges in relation to output, consumption, processing, and trading. This, the bank wrote, could transform the industry either temporarily or permanently. At the height of the public health crisis, a lot of American facilities had to shut down because of outbreaks, which significantly affected operations and inventories.
Chenjun Pan, the bank’s senior analyst animal protein, said in a news release:
Labour shortages, operational suspensions, soft demand, and channel shifting will force industry players to increase automation, adopt digitalisation, improve plant working conditions, streamline processing, and integrate along the supply chain to optimise operations and secure margins.
Overall, pork prices could be affected by growing geopolitical tensions, unfinished trade negotiations, and the coronavirus. A key factor, too, is China as imports are slowing down due to an increase in COVID-19 cases in Beijing. Domestic pork prices have decreased over the last month or so as supplies have exceeded demand levels, but a new report highlights an upward trend
In other commodities, September corn futures fell $0.05, or 1.54%, to $3.20 per pound. September wheat futures dipped $0.04, or 0.76%, to $5.2375 a bushel. September soybean futures declined $0.1375, or 1.53%, to $8.886 a bushel.