Pork Producers Advised to Take Advantage of Strong Forward Pricing Options

The Director of Risk Management with HAMS Marketing Services is advising pork producers to consider pricing as much as 30 percent of their hog production through the spring, summer and early fall

The U.S. Department of Agriculture’s Hogs and Pigs Report for the first quarter of 2021, released last week, indicates U.S. hog numbers have declined about two and a half percent from year ago numbers, a higher decline than had been expected.

Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, acknowledges strong pork demand domestically and on the export front is supportive of higher prices but demand remains an elusive thing to nail down in the context of the pandemic.

“A domestic market combined with what has been really strong demand from China continues to support the idea of higher prices“

“We’ve just got so many moving parts and so many changes from the normal relationships that we normally rely on such as the amount of product flowing through food service like the restaurant business and the amount of product going direct into consumers homes for home consumption so it’s really kind of disrupted the normal supply chains.

“That said, evidence still suggests that demand is really good.

“We’ve seen exceptional consumption and generally improving prices over the course of the last six months.

“That in a domestic market combined with what has been really strong demand from China continues to support the idea of higher prices but, arguably, what solves high prices is high prices.

“At some point there’ll be diminishing positive effects from strong demand just because the prices are getting so high that it will start to ration off some of that demand.”

Fulton says hog prices look really good through the spring, summer and early fall time frames so he encourages producers to look at pricing as much as 30 percent of their production through that period.

Beyond that, he believes, we can still expect some higher prices into the fall as those months still don’t represent a profit and he doesn’t expect a lot of downside potential in the current market context.

Farmscape is a presentation of Wonderworks Canada Inc.