Lower than Expected U.S. Slaughter Hog Numbers Create Profitable Forward Contracting Opportunities

Oct 11, 2021

The Director of Risk Management with HAMS Marketing Services reports lower than expected slaughter hog numbers have helped create an opportunity to lock in some very profitable prices. USDA's quarterly Hogs and Pigs report, released September 24th, indicates, while the heavier weight slaughter hog categories were in line with market expectations, some of the lighter weight categories fell six percent from year ago levels.

Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, suggests the drop is a reflection of disease challenges in the U.S. and we can likely expect firmer prices as a result.

Clip-Tyler Fulton-HAMS Marketing Services:

Interestingly the market reacted very very positively. In fact, the Lean Future saw their largest single day increase that they've ever seen. Usually there's price limits as to how much the market can move and that's still the case but, what has happened recently is the U.S. Futures Exchange, the CME Group, changed the price limits associated with lean hog futures and it happened to be the first day that we've seen a limit move at these new larger limits.

It's kind of an interesting thing that, in response to this really bullish Hogs and Pigs report, the market had pretty much the biggest move the futures had ever seen and that corresponded with some really forward contracting opportunities.

I think that there are a lot of producers taking advantage of that and mostly focussing on the winter time frame. There's not a lot of action for the spring of next year yet.

Source : Farmscape

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