The Director of Risk Management with h@ms Marketing Services is advising pork producers to take advantage of profitable futures prices by forward contracting a limited portion of their production.
The trade situation, global demand for pork and African Swine Fever are expected to influence hog markets in 2019.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says despite consistently record high fourth quarter slaughter numbers, the slaughter was probably not quite as high as originally expected so it was a little bit more manageable and prices have stayed firmer than they otherwise would have.
We think that the forward prices right now, based on current feed prices, represent a fair level of profitability. We’re definitely on the plus side for at least the first 10 months of the year. The real question mark is how does the African Swine Fever and trade issue play out.
What we think is that it’s prudent to go and take some protection, especially based on recent rallies, just secure some of that good profitable pricing for the first 10 months of the year but on a relatively small portion of your hogs so probably something in the neighborhood of around 25 percent. Then you can set targets for larger portions of your production if we see some improvements to prices as a result of some of these trade issues coming to fruition.
~ Tyler Fulton, h@ms Marketing Services
Fulton says the packers have been profitable in 2018 and, over the year, producers have been marginally profitable. He says, if we continue to see the demand growth that we have over the past two to three years in that upward trajectory improving demand on both the domestic and export markets, the prospects look great.
