It’s a sign that producers will soon take steps to shrink their herds, with growers losing as much as $80 a head, said Shane Smith, chief executive officer of Smithfield Foods. Demand from top buyer China is waning as the cost to feed animals is surging.
A drought in the Midwest has deteriorated crops, with corn at its worst conditions for this time of year since 1992. That’s squeezing profits and making it more appealing for growers to sell the grain, which has risen more than 20% from its May lows.
“There’s a concentration of people in the industry who grow their own corn, they grow their corn and they feed it to the animal,” he said in an interview Wednesday at the Wall Street Journal’s Global Food Forum in Chicago. “They’re going to have to make a decision. Do I sell my corn and just forget about the animal?”
US growers usually only start shrinking herds when they face cash flow losses, and that is already happening, Smith said. He declined to comment on whether Smithfield, owned by Hong Kong-listed WH Group, is planning to cut back as well.
The US meat market is facing a glut that may take until the end of next year and into 2025 to normalize, he said. That’s all happening just as only 55% of the US corn crop was rated good to excellent, the lowest for this time of year in more than three decades, according to data from the US Department of Agriculture.
PigUA.info by materials bnnbloomberg.ca