The Director of Risk Management with HAMS Marketing Services says the need for effective risk management strategies will be especially important as we move into 2022.
Despite significant volatility over the course of 2021 due to uncertainty over the pandemic, hog prices were generally quite good but profitability was reduced as a result of record high feed prices.
Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says amid this continued volatility pork producers will need to focus on risk management.
It’s following a fairly standard plan, doing some incremental sales especially in some of those higher periods of the summer and when the late fall months come available, covering some of those needs depending on where those values start out at.
We’ve got scenarios where summer prices are generally going to be quite favorable. From a historical standpoint 250 dollars per market hog is attainable right now or very near attainable in forward pricing so that’s obviously got some potential. But, by the same token, we’re dealing with just exceptionally high corn and soybean and feed ingredient prices. That’s really cutting back into the profitability potential.
I think we’re going to follow a fairly normal trend where the summer timeframe will be the profitable period but moving into the fourth quarter of 2022, that’s where producers are really going to have to buckle down and squeak out those margins if we can find them on the forward and on the feed ingredient pricing opportunities.
~ Tyler Fulton, HAMS Marketing Services
Fulton says the need to do risk management is ever present in this uncertain economic environment.
