The director of risk management with h@ms Marketing Services suggests pork producers can mitigate some of the downward price pressure on live hogs by forward pricing.
The normal seasonal spring rally in live hog prices has gotten off to a disappointingly slow start this year as live hog prices have trended only slightly higher due to downward price pressure resulting from slaughter animals from the sows added to the U.S. breeding herd a year ago hitting the market now combined with reduced losses from PED.
Tyler Fulton, the director risk management with h@ms Marketing Services, recommends forward pricing to ease some of that pressure.
Tyler Fulton-h@ms Marketing Services:
Right now forward prices are offering a fairly significant premium over the current cash market and what I'm talking about is forward prices that are being offered largely for the summer and all the way out till October for example.
Theses typically run at approximately a 15 to 20 dollar premium to the cash market today and we've consistently been seeing forward prices in excess of 25 to 30 dollars premium and all of this in the context of the prospect of heavier supplies than what many had anticipated.
I think producers can look to lock in some of their prices to mitigate some of the pressures on the market and I think there's generally pretty good value in there, especially when the Canadian dollar is running low from an historical standpoint at around that 80 cent mark.
By Bruce Cochrane