The director of risk management with h@ms Marketing Services says, despite a slide over the past couple of weeks in both the cash and futures markets, returns for live hogs remain profitable.
As a result of fears over the potential impact of Porcine Epidemic Diarrhea on slaughter hog supplies both cash and futures markets have been extremely strong this spring.
Tyler Fulton, the director of risk management with h@ms Marketing Services reports two weeks ago we were sitting at near record prices but those fears over supplies have eased.
The market remains really volatile.
Whether you’re talking about the cash market situation, what producers are being paid today or for that matter what’s being offered in forward prices or in the futures market, by all accounts things are really volatile.
What we’ve seen in the last two weeks or so is both of those markets come off of the highs and really I’d say what triggered it was the last Hogs and Pigs Report that the USDA put out.
Effectively what it showed was that the USDA did not think that we would be looking at a hole in marketings in the summer months much bigger than about four to five percent and the market had factored in something probably closer to double that so it had to reconcile the two.
That’s possibly what’s triggered the sell off in the futures and possibly what’s softened the cash market as well with buyers being maybe a little bit more optimistic that they’ll be able to source supplies into the summer months.
Fulton says, while the slide has definitely affected profitability, we’re still at exceptional levels of profitability.
