Livestock prices began the new year with optimism, with summer-month lean hog contracts approaching $100 per hundredweight (cwt), and with three live cattle contracts better than $140/cwt. Supplies have come down a bit, as evidenced by recent USDA reports. Both the latest cattle on feed and hogs and pigs reports indicate tighter supplies, which should help support prices for the time being.

But these days, there are more supply-and-demand questions than there used to be. As the COVID-era enters its third year, and as new case records shatter, will there be enough workers to keep the supply chains moving? Supply chain issues and backlogs had huge financial implications in 2020.

“It’s an hour by hour thing, honestly,” said Toni Dunker of Advance Trading in Quincy. “They’ll (meat packers) have enough people to come in for one shift and then maybe be way short on the next. That is something that we continue to watch. We get updates on all of the plants once a week as far as what percentage are they working of their normal kill rate. When you watch that, you can see some real variability in there. The labor force is definitely one of our challenges in the livestock industry at this time.”

Dunker said the labor challenge extends far beyond the packing plant.

“It’s getting that product moved, it’s getting animals to the facilities … it’s the whole thing, taking it from the farm and moving that product when it’s finished," Dunker said. "I feel like we’re managing it better. I think these plants have figured out a lot of what they need to do in terms of their labor issues.”

The new year also brought another question into the supply and demand equation: What will Prop 12 mean for the meat markets now that California is playing by its own rules? Californians passed a ballot initiative that took effect this month. It prohibits meat produced from any state that doesn’t adhere to certain livestock housing rules. The Prop 12 issue will have a much bigger impact on pork than it will for beef.

“California consumes about 13% of U.S. pork”, Dunker said. “So, it is an important component to the demand structure domestically.”

She expects retail pork prices in California to significantly increase, while the rest of the country will have more product to consume. Perhaps the biggest question regarding Prop 12 is whether it will be decided by the marketplace or by the courts.