The Director of Risk Management with HAMS Marketing Services is encouraging pork producers to watch for rallies in the futures market over the winter months that could allow them to reduce their losses.
Live hog prices continue to be pressured by burdensome supplies of slaughter hogs amid the uncertainty around COVID-19 and the implications for pork demand and pork processing.
Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says the summer pricing has failed to deliver anything that would come even come close to profitable production.
We have seen futures creep back a little bit. I would say we could start to consider setting some targets if we get another eight to ten percent rally in the October through February period so, over the winter months, if we could see another ten percent rally, I think that would be a good trigger to re-enter the market.
There’s not a lot of producers that have been taking protection at these levels because they are quite unprofitable and, if we do see a recovery, then I would say that producers would probably get back and try to cover off some of that risk.
Even though that’s probably still at a loss, it would provide some certainty and be possibly a smaller loss than you would otherwise expect with the cash market. It’s just a prolonged period where prices are not profitable and there’s really no prospect in the next three to six months that they will be profitable.
~ Tyler Fulton, HAMS Marketing Services
Fulton says the U.S. continues to deal with record setting hog numbers and we anticipate we’ll be moving an additional six to eight percent more pigs through that seasonal late August to early December run up. He says the peak tends to come in latte November early December so we’ll be looking at larger hog supplies and likely continued pressure on prices.
