Stick to individual established marketing strategies, an industry rep said
By Diego Flammini
With so much uncertainty surrounding commodity prices as the coronavirus pandemic affects multiple sectors, hog producers may want to stick with proven individual marketing strategies.
“I would stand by the plan to take some risk off the table by letting some of those target (prices) hit and generate forward contracts, therefore mitigating a portion of the risk going out eight to 10 months,” Tyler Fulton, the director of risk management with HAMS Marketing Services, told Farms.com.
Swine producers may feel like they need to alter their marketing strategies to fit current market conditions.
But now is not the time to do that, Fulton said.
“I don’t think you want to be changing your plan during a crisis, which is what we find ourselves in,” he said. “I think you can review (your plan) and see if it’s still a reasonable and rational approach. Arguably, you can take a different approach today than what you would have two months ago.”
Projecting what hog prices could look like after the COVID-19 curve flattens is difficult.
“I can say the markets are going to be volatile and highly uncertain for the next little while,” he said.
Between the coronavirus and African swine fever, prices for pigs could head in either direction, Fulton added.
“There’s way too many moving parts,” he said. “You could say that African swine fever was the biggest black swan event (an event that comes as a surprise and has major effects) to hit the hog sector in the last 20 years. Then you could layer the consequences of the COVID-19 situation on top. Effectively, you have scenarios that could be anything from the absolute best we’ve seen in the last decade to the absolute worst."