Jim Long Pork Commentary, USDA Announces Coronavirus Food Assistant Program (CFAP)

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Jim Long, President and CEO Genesus Genetics

About a month ago President Trump and Ag Secretary Perdue announced the Coronavirus Food Assistant Program (CFAP). At the end of last week some more details were announced re hogs.

Hogs Eligible Unit of Measure ACT 1 Payment Act 2 Payment
Pigs < 120 lbs. Head $28.00 $17.00
Hogs > 120 lbs. Head $18.00 $17.00

Producers must provide the following information for CFAP:

  • Total sales of eligible livestock, between January 15 to April 15, 2020, of owned inventory as of January 15, 2020, including any offspring from the inventory (Act 1);
  • Highest inventory of eligible livestock, by species and class, between April 16, 2020, and May 14, 2020 (Act 2).

A single payment for livestock will be calculated the sum of the producer’s number of livestock sold between January 15 and April 15, 2020, multiplied by the payment rates per head, and the highest inventory number of livestock between April 16 and May 14, 2020, multiplied by the payment rate per head.

CFAP payments are subject to a per person and legal entity payment limitation of $250,000. This limitation applies to the total amount of CFAP payments made with respect to all eligible commodities.

Participants that are corporations, limited liability companies, and limited partnerships these corporate entities may receive up to $750,000 based upon the number of shareholders who contribute at least 400 hours of active person management or personal active labour.

Observation

U.S. hog producers have been hit hard by Coronavirus implications. It is good the U.S. government is providing significant money to fill back some of the losses. It will not make most producers whole but it will help.

Sow Slaughter 

The latest sow slaughter data for the week ending May 9 was just over 70,000. The largest we can remember in a long time. In 2020 the average weekly sow slaughter was 57,500. There is no doubt the U.S. sow herd is rapidly declining.

This is Interesting 

The general premise in the industry is that hogs are backed up due to lack of harvesting related to Coronavirus issues. Below is some data that baffles us.

The week of May 15 the average carcass weight on the National Daily Base Slaughter Data was 220.17 lbs. avg carcass data. Last week the average weight in same database was from Monday-Thursday 217.5 lbs. (Same week a year ago 214.19)

That’s a drop of 2.6 lbs last week from the week before. How can we explain weight dropping so significantly when hogs are supposed to be backed up? It hasn’t been hot? Harvest numbers are still below a year ago? Has euthanasia been that large? Have feed adjustments pulled down weights? Have open plants have producers pushing hogs in? Are meat lockers and on-farm selling?  We are baffled! It will be interesting to see what weights do this week. Could this be a factual signal hogs are not backed up as most believe? Crazy business.

Other Markets 

We know the U.S. hog market has been miserable for most. It appears also some other countries have seen decline with most attributing to Coronavirus issues including decrease demand from lower incomes due to unemployment, restaurant usage decline, currency fluctuation and lower economic robustness.

  March 26 May 20
China 2.32 1.92
Russia 54.23 55.58
Spain 75.51 62.91
Brazil 50.17 35.46
Mexico 53.68 34.41

 

Every country is down significantly except Russia which has an internal market without significant imports or exports. The other countries have seen declines between $30 to $100 per head in the last two months. Not a positive picture of demand as we know supply has not changed significantly.

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