HAMS Marketing Services is advising swine producers to watch for any rallies in the futures market and consider locking in fourth quarter hog prices.
The USDA’s second quarter Hogs and Pigs Report showed an unprecedented eight per cent year over year increase in U.S. slaughter hog numbers further pressuring hog prices and adding to the volatility that we’ve seen over the past couple of months.
Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says China is expected to increase pork imports to make up deficits resulting from African Swine Fever but there are constraints such as its trade friction with the United States.
African Swine Fever is well established now in Vietnam and it’s moving through southeast Asia so we’re not necessarily beholding to what this issues are in China and to some degree it’s a bit of a shell game where, if European suppliers really concentrate filling that deficit in China, that may open up opportunities for North American pork in other destinations where the Europeans had the foothold.
But there’s really no tangible shift in sales patterns yet. We still have very little certainty as to what the time line would be behind any kind of increased exports to Asia. We think that if we were to get a good recovery, even a 25 percent recovery back to some of the highs that we saw, just 25 percent, that might be a decent pricing point to cover some or more of your fourth quarter production.
It’s really not clear as to when we will start to see some price movements that reflect increased exports so I think in that circumstance if you can secure good profitable prices in the fourth quarter, which is not the norm, then it’s probably a prudent action to do a portion of your production.
~ Tyler Fulton, HAMS Marketing Services
Fulton advises producers to watch closely for any rallies and react accordingly.
