Pork Producers Advised to Lock in a Portion of Production for the Winter and Early Spring

The Director of Risk Management with HAMS Marketing Services is advising pork producers to lock in hog prices for the early winter to early spring months for about 25 percent of their production.Typical seasonal trends combined with lower growth performance due to the hot weather, especially in the U.S. Midwest, have tightened hog supplies and 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 right now Canadian cash hog prices are averaging somewhere between 260 and 280 dollars per hundred kilograms which is phenomenal but, as we start to see higher hog numbers coming to market, those prices could drop off quickly.

Clip-Tyler Fulton-HAMS Marketing Services:

As per usual we expect the November December time frame to really be dealing with the heaviest supply of hogs, which means prices are anticipated to drop well under 200 dollars per CKG but 200 dollars per CKG is still kind of in the vicinity of some of that early winter and late winter, spring forward contract prices which is, historically speaking, still a very solid price for that time of year.

The forwards have probably had some benefit from the cash strength that we've seen recently and so, for those producers that haven't taken any price protection through the fall and winter months, we think it makes sense to take some risk off of the table and price possibly 25 percent of your production at current prices just because things could really start moving lower in a hurry as we start to see some of these heavier hog weights, heavier hog numbers and there's still some question as to how it will perform in the current economic environment.

Fulton says, even with the elevated feed grain prices, producers are squarely in profitable territory but the question is, how will things pan out for the rest of this growing season and how long can we expect cash prices to remain at their current high levels?