H@ms Marketing Services is recommending pork producers forward contract about a third of their production through the spring summer of 2018.
The availability of hogs for slaughter has been running significantly below the numbers projected by the USDA in its Hogs and Pigs Report released at the end of September.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says generally we anticipated about three and a half to four percent more hogs than we saw last year at this time but that number has been running closer to two percent higher which is good news given the fact that, while we’ve seen great domestic pork demand, export demand has been only holding steady.
Most producers have got a large portion of their production already hedged and, when I say that, I’m talking about independent hog producers in western Canada and so they’ve been pretty active and are at very competitive prices.
The recommendations right now, given that we just in the last week have seen some new contract highs come in in the spring of 2018 and even the summer, we’re generally advocates of covering off roughly a third of a producer’s production in that spring summer time frame at those previous contract highs.
For many producers that relates to about the benchmark level of about 200 dollars per pig which is good profitability for that time of year and really mitigates that uncertainty relating to demand and production risk.
~ Tyler Fulton, h@ms Marketing Services
Fulton says recently slaughter numbers have been closer to projections, for example last week when numbers were about 3.6 percent higher. He says, if we start to see a situation where the hog supply starts to really balloon and we’re not clearing the market, that generally has price implications, especially in the winter months when we need to be consistently clearing the market of all production.
