The Director of Risk Management with h@ms Marketing Services warns the wild card when it comes to North American hog markets continues to be on the trade front.
The Canadian government is currently involved in trade negotiations on two fronts, the Comprehensive Progressive Trans-Pacific Partnership and the renegotiation of the North American Free Trade Agreement.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, points out we are reliant on roughly 20 to 25 percent of all of the U.S. pork production being exported so, if there’s any disruptions to that type of trade or any major changes, whether it be on currency or on geo-political issues, that could put the pork sector at risk.
The Trans-Pacific Partnership is definitely an important feature for Canadian hog producers. It will give us a significant advantage in a couple of countries that will likely augment our exports to those countries but it really isn’t being figured into markets. Because the U.S. pulled out of those talks, it’s really not impacting the futures markets which is where we would look to see if there’s any changes.
On the flip side we’ve got NAFTA which this week we’re going into the sixth round of negotiations and, by the end of this week, we may have an idea as to whether or not any significant progress was made there. It’s really critical that we see some progress because if we don’t the market will likely increasingly factor in the possibility of some major trade disruptions, in particular with Mexico, in that fourth quarter, in that October, November, December time frame.
Tyler Fulton-h@ms Marketing Services
Fulton notes the earliest that we would see any major disruption is six months from the time the President would trigger a pullout of NAFTA so the concern is that if negotiations don’t go well on this round it elevates the possibility the President would trigger such a pullout and production and markets in the last half of 2018 would be at risk.
