The Director of Risk Management with h@ms Marketing Services says most Canadian pork producers have taken steps to protect themselves from the rising value of the Canadian dollar and the anticipated softening of live hog prices resulting from anticipated record hog supplies over the next three to six months.
As North America moves out of the hot summer time frame, hog supplies along with pork supplies are expected to increase by about 10 percent, or as much as 12 percent over the next three months.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, anticipates we’ll see three to four percent more pork this year in the fourth quarter than last year and the fourth quarter of last year saw record volumes.
The Canadian dollar is now trading at the higher end of its trading range for 2017 which is a very negative impact on Canadian hog producers. Thankfully a large percentage of independent hog producers have price protection already secured and that was secured at significantly lower Canadian dollar values.
In some sense we’re kind of hedged against the recent uptrend but no doubt it’s concerning to see the Canadian dollar start to appreciate even as high as 80 and higher cents against the U.S. dollar.
I think producers are probably well positioned to weather the downturn that we expect to see over the next three months or so. In the event that we see that Canadian dollar drop or the lean hog futures provide a little bit of a recovery we think that maybe if producers are looking for more protection in the winter time frame that they could set targets, roughly 10 to 15 dollars higher than current forward prices are offering.
~ Tyler Fulton, h@ms Marketing Services
Fulton says that’s only if they’ve got less than 50 percent coverage but, in general, most producers are in pretty good shape.
