Pork Producers Advised to Consider Feed Costs When Locking in Prices

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Farmscape for June 4, 2021

The Director of Risk Management with HAMS Marketing Services is advising Canadian pork producers to consider grain prices as they make forward contracting decisions for the fall and winter months. Carcass values in the United States are bumping up against all time highs and, since the prices the packers pay in both the United States and Canada reference those values, it’s a very profitable time for producers. Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says prices are coming close to 300 dollars per pig and, even with exceptionally high grain prices, Canadian producers are still very profitable.

Clip-Tyler Fulton-HAMS Marketing Services:
For those producers that are looking to hedge some of their production, hedging at levels of close to 200 dollars per pig for the fourth quarter of this year, that’s a pretty exceptional level to be able to secure. But those producers should be making those decisions in the context of what their feed costs are because, even 200 dollars a pig, doesn’t necessarily secure absolute profitability. We’ve got huge volatility happening in corn and soybean markets and that’s obviously the main costs that are incurred by hog producers in their operations. Generally speaking we’re pretty supportive of guys securing a quarter of their production into the fall months and winter months at current prices just because it is an outlier on the normal seasonal trend.

Fulton notes the processing plants that were running at a faction of capacity one year ago are reporting steady uninterrupted processing, especially in the United States, and producers are making some of the best margins over the past eight or nine years.

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