The manager of risk management with h@ms Marketing Services says, despite recent declines in live hog prices, there are opportunities to lock in profits on the futures market this coming spring and summer.
Over the past month North American live hog prices have fallen dramatically.
Tyler Fulton, the manager of risk management with h@ms Marketing Services, says we've seen a fairly steady and precipitous decline in hog prices largely as a function of U.S. markets eroding due to heavy supply.
Tyler Fulton-h@ms Marketing Services:
Right now we are pretty much at peak hog numbers for the year and the hog carcass weights are also climbing up which is resulting in really record hog production or pork production across North America and that's really putting a lot of pressure on cash hog prices and definitely seeing some influence on futures.
That's probably the biggest squeeze, is the supply situation, not just from the context of hogs and pork production but also the competing meats as well.
We're seeing a 30 percent increase in chicken supply according to the last USDA Cold Storage Report and beef is really climbing back as well by virtue of heavy carcass weights.
So it seems as though North America is going to be awash in meat and poultry and that is putting heavy pressure on producer profitability.
Fulton anticipates we are likely to have a few weeks this winter where we bump up against 2.4 million hogs slaughtered in the U.S. on a weekly basis compared to what is generally believed to be an overall capacity to slaughter roughly 2.42 million, so we're not at the maximum but we're getting pretty close.
He says there are some generally good premiums being offered in the spring and summer months in terms of forward prices and, despite the fact that they are significantly less than what we've seen in the last couple of years, they are still profitable.