Chicago - IBP Inc. and Cargill Inc. unit Excel Corp. spokesmen said hog slaughter operations this week would be trimmed due to lower pork prices and unfavorable operating margins.
IBP spokesman Gary Mickelson said hours at the company's six hog slaughter plants would be down slightly.
“We've taken out all of the overtime hours we previously scheduled for this week and as a result, we expect to run approximately 40 hours, or less, at each facility,” Mickelson said.
Mickelson added that the company normally likes to operate six days a week at its plants but sometimes adjusts operating hours based upon marketing conditions.
Mickelson also said its Logansport, IN plant was not slaughtering due to scheduled maintenance.
Excel spokesman Mark Klein declined to comment on the extent of reductions, but said some of Excel's three plants started trimming hours last week.
“We will be operating at reduced hours and will continue to do so until margins improve,” Klein said.
Excel operates hog slaughter plants in Ottumwa, IA, Beardstown, IL, and Marshall MO
ConAgra Inc. a unit of Swift and Co. said three pork plants were scheduled to work normal hours but could change as the week goes on, said K.T. Miller, Swift spokeswoman.
Spokespersons from Smithfield Foods and Farmland Industries were not available for comment on this week's operating hours.
Operating margins were said to have eroded amid sliding pork prices. Also, now that hog marketings have thinned and hog prices have begun to rise because of heat and humidity, packers appeared reluctant to compete for the hogs, several industry sources said.
Interior Iowa and southern Minnesota top prices for hogs delivered to the plant were quoted by the US Department of Agriculture at $43.50, up $0.50 from Friday and up $1.00 from a week ago.
“The heat is one reason they (packers) will not get the hogs. And they don't have the demand (for pork),” said Paul Georgy, president of Allendale Inc., an agriculture research firm.
Forecasts for temperatures in the 90 degree Fahrenheit this week should reduce hog marketings in the Midwest, and with pork demand waning seasonally, meat packers will be reluctant to bid higher for the fewer hogs, Georgy said.
“Rather than pay for hogs, they will just slaughter less,” he said.
Another round of pork sales may occur next week as supermarkets try to restock immediately ahead of the three-day Independence Day weekend, but once that's completed, Georgy said he expects sales of beef and pork to slow in July.
“We are going into the dog days of summer and we have a lot of beef and pork around,” he said.
US pork cut-out values were quoted by USDA down $0.44-$0.51 per cwt. The value of a Number 2 hog carcass was quoted at $55.86, down $0.49 from Thursday and down $1.19 from the previous Friday.
Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
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