Disciplined Hedging Program Recommended

Jan 27, 2020

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The Director of Risk Management with HAMS Marketing Services is recommending a steady disciplined program of hedging a portion of hog production heading into the spring and summer. Despite record U.S. production, North American live hog prices have been holding steady since the start of the new year, supported in part by continuing steady to strong domestic demand for pork and the anticipation of increased exports.

Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says there is an expectation that we'll see increased movements of pork to China, especially after the new signing of the U.S.-China trade deal, but the million dollar question is, at what price level do buyers in China start pulling back from purchasing because the prices have gotten so high?

Clip-Tyler Fulton-HAMS Marketing Services:

There's a lot of moving parts happening but I think generally speaking there is good reason for optimism that we could see some big improvements in export volumes and consequently some improvements in prices. But the expectations of many people that we'd be dealing with better prices now have just not come to fruition.

I think it does speak to the importance of kind of a steady disciplined program of hedging a portion of your production.

At this point I would be focussed more on the near term.

By that I'm saying the next month or two months of production, to hedge a portion of that if you haven't already and set reasonable targets that would represent maybe a five to ten percent improvement in prices that would cover off as much as 15 to 20 percent of your production into the spring and summer time frame.

Source : Farmscape

Video: US Soy: Pig growth is impaired by soybean meal displacement in the diet

Eric van Heugten, PhD, professor and swine extension specialist at North Carolina State University, recently spoke at the Iowa Swine Day Pre-Conference Symposium, titled Soybean Meal 360°: Expanding our horizons through discoveries and field-proven feeding strategies for improving pork production. The event was sponsored by Iowa State University and U.S. Soy.

Soybean meal offers pig producers a high-value proposition. It’s a high-quality protein source, providing essential and non-essential amino acids to the pig that are highly digestible and palatable. Studies now show that soybean meal provides higher net energy than current National Research Council (NRC) requirements. Plus, soybean meal offers health benefits such as isoflavones and antioxidants as well as benefits with respiratory diseases such as porcine reproductive and respiratory syndrome (PRRS).

One of several ingredients that compete with the inclusion of soybean meal in pig diets is dried distillers grains with solubles (DDGS).

“With DDGS, we typically see more variable responses because of the quality differences depending on which plant it comes from,” said Dr. van Heugten. “At very high levels, we often see a reduction in performance especially with feed intake which can have negative consequences on pig performance, especially in the summer months when feed intake is already low and gaining weight is at a premium to get them to market.”

Over the last few decades, the industry has also seen the increased inclusion of crystalline amino acids in pig diets.

“We started with lysine at about 3 lbs. per ton in the diet, and then we added methionine and threonine to go to 6 to 8 lbs. per ton,” he said. “Now we have tryptophan, isoleucine and valine and can go to 12 to 15 lbs. per ton. All of these, when price competitive, are formulated into the diet and are displacing soybean meal which also removes the potential health benefits that soybean meal provides.”