Uncertainty Over COVID Continues to Result in Hog Market Volatility

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Farmscape for October 29, 2020

Full Interview 7:31 Listen

The Director of Risk Management with HAMS Marketing Services says uncertainty over the what will happen with COVID continues to result in considerable hog market volatility. From a price perspective, hog markets have been holding up reasonably well since bottoming out in the summer, particularly in terms of cash prices and wholesale pork prices, but forward prices are starting to show weakness as the result of uncertainty associated with COVID. Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says it’s been difficult to identify any decisive trends.

Clip-Tyler Fulton-HAMS Marketing Services:
We’re seeing certain aspects of the supply chain that are attempting to secure their critical supplies and I think that’s probably contributed to the run up in different products like ham prices and pork bellies, which hit a near term high about eight to ten days ago.
They’ve since come down and actually come down very sharply. They’ve been correcting lower and I think that’s probably a fact that the individual companies along the supply chain are simply trying to secure those supplies so that they can operate with some degree of certainty in light of a second wave and possibly more shut downs. So we’ve got huge volatility in individual cuts and that’s contributed a lot of uncertainty as to where the market is going to go. So demand is really difficult to put your finger on right now.
Needless to say, export wise, it’s performing better than previous years. In particular China is still short of meat protein and we expect that’s going to be the case here for at least several more months, if not years.

Fulton says pork producers were really active in terms of forward pricing 10 days to two seeks ago so there’s a lot of price protection in place for 2021 and he encourages producers to watch for further rallies as an opportunity to add additional price protection.

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