Last week, National Pork Board hosted a Checkoff-funded webinar – The Ukraine-Russia War and the Meat Livestock Value Chain – to provide pork producers with an analysis of the current situation. Panelists included:
- Rupert Claxton, Gira
- Joe Kerns, Partners for Production Agriculture
- Dr. Steve Meyer, Partners for Production Agriculture
Impact of War Has Market Consequences Worldwide
Rupert Claxton shared the global economic impact of the Ukraine-Russia War on energy, fertilizer, feed and the livestock markets.
Fertilizer
Russia accounts for 13% of globally traded fertilizer value, producing:
- 23% of ammonia
- 21% of potash
- 14% of urea.
Since fertilizer prices are rising and the margins are tight, farmers are likely to buy less or conserve the fertilizer they already have, meaning potentially lower yields globally, reduced exports and higher grain prices.
Feed
Both Russia and Ukraine are massive producers and exporters of oilseeds and grain, specifically wheat. Prices were already increasing prior to the invasion due to weather events, supply chain disruptions and input costs, but the trade limitations and tapering production add additional challenges.
Planting season is approaching, but prime regions of corn and wheat production in Ukraine are occupied by the Russian army. Additionally, the skyrocketing input cost, low liquidity, wartime obligations, labor and supply chain disruptions all factor in a low outlook in yield. Finally, the winter wheat will need to be harvested in July or August, so time will tell if it can be harvested.
Meat Market
Overall, Claxton explained the immediate impact of the war centers more on higher feed costs compared to meat. Chicken is Ukraine’s primary protein commodity, and production has plummeted due to energy cuts, supply chain disruptions and labor shortages.
Claxton isn’t concerned about the direct impact of meat supply globally since other countries can backfill the need with Ukraine’s approximately 500,000 tons of lost protein, mostly chicken, halted in the export market. This is coupled with global consumption declining as inflation and higher gas prices squeeze disposable income.
A Reality Check on the Price of Hogs
As the big rock of the conflict overseas hits the small pond of U.S. agriculture, Joe Kerns explained that producers can manage their risk domestically and gave a reality check for the price of hogs during these volatile times.
Kerns shared how assumptions for hog production are significantly positive, regardless of the negative impact of weather events, increased feed cost and trade dilemmas.
Kerns continued to disclose how livestock insurance is a risk management strategy different than crop insurance tables. He focused on Livestock Risk Protection and Livestock Gross Margin.
- Click here for more resources about livestock insurance options and policies.
- Click here for an agent locator.
Bullish: Quarterly Hogs and Pigs Report Analysis
USDA released a bullish Quarterly Hogs and Pigs Report on March 30. This report shows U.S. inventory of all hogs and pigs as of March 1.
- Inventory of all hogs and pigs was 72.2 million head, down 2% from last year and down 3% from Dec. 1, 2021.
- Breeding inventory was 6.1 million head, down 2% from last year, and down slightly from Dec. 1, 2021.
- Market hog inventory was 66.1 million head, down 2% from last year, and down 3% from Dec. 1, 2021.
- December 2021-February 2022 pig crop, at 31.7 million head, was down 1% from last year.
- The average pigs saved per litter was 10.95 for the December 2021-February 2022 period, compared to 10.94 last year.
In addition to the report, Dr. Meyer shared how there is currently limited slack with slaughter capacity, regardless of the increased line speeds in a few plants that received waivers.
