The Director of Risk Management with HAMS Marketing Services is advising pork producers to take advantage of strong futures and lock in prices as new highs are established on a lot of the spring and summer month contracts.
As a result of reduced slaughter hog supplies due to health challenges in the U.S. 2022 has been among the three most profitable years for pork producers over the past decade.
Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says the latest Hogs and Pigs Report indicated a reduced hog supply in the first three to four months of this year, which was a surprise to analysts resulting in a fairly positive price response with some of the nearby contracts gaining three to four dollars per hundredweight last week.
Starting into the first marketing week of 2023, I think it’s important to note that we’re at a record high level. We’ve never started hog prices this high in a calendar year, so that bodes well. Really, when you’re thinking about hog markets you can always use the adage, “cash is king.” The cash market is really the base by which we move through the seasonal trend over the course of the year.
What I would say about what we’re going to see in 2023 is that things appear to be shaping up to be a fairly typical trending year but it’s one of those things that, if we start to see some pretty significant disruptions on the demand side or, for that matter, on the supply which is almost impossible to forecast, that’s when producers risk management plans really pay for themselves in securing some of those good cash flows that are projected today.
~ Tyler Fulton, HAMS Marketing Services
Fulton suggests factors to pay attention to moving forward include slaughter hog volumes, currency exchange rates and pork consumption patterns. He notes the U.S. Supreme Court is also due to rule on the validity of California’s Proposition 12 and that could have a major impact on the long-term trend of hog supply.
