Feed Grain Prices Expected to Determine Hog Market Profitability this Winter

The Director of Risk management with HAMS Marketing Services says profitability in the swine sector through this winter and into early spring will depend largely on feed grain prices.

As is usual for this time of year the cash hog supply has tightened due to typical seasonal trends combined with lower growth performance due to the hot weather, especially in the U.S. Midwest and that has pushed cash hog prices to some of the highest levels we've seen in years.Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says we've got Canadian cash hog prices averaging somewhere between 260 and 280 dollars per hundred kilograms, which is a phenomenal price.

Clip-Tyler Fulton-HAMS Marketing Services:

Profits are a little bit more nuanced and a lot of it will come down to the cost base that the feed grains that those individual producers brought in that product for.
We know that commodity prices have also gone through the roof and have actually made it more difficult over the course of the last six or eight months to turn a profit.

I think, even with those elevated feed grain prices, we are squarely in profitable territory and then the question really is, how do things pan out for the rest of this growing season and how long can we expect cash prices to hang onto the levels that we're currently benefitting from.Right now, the forward contract prices really suggest we start to drop off by the end of August and we'll likely lose easily 50 dollars per CKG over the course of the next month and a half or so.

Fulton says, as usual, we expect the November December time frame to be dealing with the heaviest supply of hogs, which means prices are anticipated to drop well under 200 dollars per CKG but that is historically still a very solid price for that time of year.

As for profitability, has says, that will depend on whether or not we get a break in some of those feed grain costs.