Even if Mexico's recent ban of 30 U.S. meat processing plants is resolved quickly it will have a more significant impact on pork exports than beef or turkey according to market analysts. In addition, the ban presents near-term challenges for pork processors.
Farha Aslam, Stephens Inc. analyst, estimates that 45 percent of U.S. hog slaughter capacity authorized to ship to Mexico, has been delisted. In a note to investors, Aslam said that compares to only 8 percent of total U.S. beef slaughter capacity and 6 percent of U.S. turkey processing capacity that Mexico has delisted.
Steve Meyer, livestock analyst for the Daily Livestock Report, calculated the four Smithfield plants that were suspended (including the Smithfield Tar Heel plant) account for more than one-third of the overall suspended capacity, according to the report.
"We estimate that 60 percent of the total Smithfield slaughter capacity and 70 percent of the total Tyson (pork) slaughter capacity cannot be shipped to Mexico at this time," the DLR analysts wrote.
Aslam said Smithfield Foods would likely take a bigger hit than Tyson Foods, Hormel Foods or Sanderson Farms, given the company's greater exposure to pork and vertical integration.
Even if the suspensions are cancelled, "it still presents a challenge to the market, especially in the short term as product destined for export now needs to be sold in the domestic market," the DLR noted.