The Director of Risk Management with HAMS Marketing Services suggests access to labor will be the biggest challenge as the pork packing plants gear up for the heavier fall and winter and hog production.
Hog supplies typically increase as temperatures fall putting added pressure on processing capacity.
Tyler Fulton, the Director of Risk Management with HAMS Marketing services, says, we are seeing some volatility from time to time due to holidays, particularly in the U.S. plants, but the expectation is that we’re not going to run into any major slaughter capacity constraints that would have a negative impact on prices during the heaviest time frames over the next two to three months.
We’re at a bit of a transition point in terms of seasonality of the year. We’ve now come out of the summer tightness of hog supplies and we’re starting to really ramp up in terms of hog numbers. We’re actually running very similar to what levels were last year or even levels of the last five years, an average of the last five years.
There’s no expectation of any big divergences from normal seasonality but, on the flip side, all of those heavier supplies typically mean some pressure on prices. But on the flip side, on the pork cutout we’re actually seeing fairly firm values.
I think there’s pretty good indication that pork is performing pretty well in this inflationary environment and the expectation is that it’s well positioned over the course of the next four or five months to continue to perform reasonably well in the context of the heavier supplies.
~ Tyler Fulton, HAMS Marketing Services
Fulton acknowledges the underlying concern is the degree to which the plants can run at their rated capacity given the labor issues. He says labour continues to be a real thorn in the side of the industry as it works to manage through COVID and through these inflationary times.
