Futures Markets Reflecting Strong Supply/Demand Fundamentals

May 11, 2021

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Forward hog contract prices have been exceptional the last few weeks.

That from Tyler Fulton, director of risk management with Hams Marketing Services.

"Futures markets are reflecting really strong supply/demand fundamentals," he said. "It's pretty typical that at this time of year, we see supplies start to tighten up. Into the summer months, we see some of the tightest supplies that we typically would see over the course of the year. That combined with really exceptional demand, both in the domestic and export markets, we're just kind of on a high right now."

Fulton notes cash prices are reflecting the same fundamentals that are getting worked into futures values.

"We've got a scenario where packers in the United States are finding it difficult to source all the supplies that they want. They want to be operating at full capacity, but quite simply, not all of them are able to find the supplies to do that."

He also gave an update on African swine fever.

"It's still wreaking havoc in China and is a huge factor that's impacting grain markets and impacting meat protein markets. There's still a massive deficit of meat protein for consumption in China and so they are still trying to contend with it."

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