While we are seeing glimmers of good news in U.S.-Chinese trade discussions, producers need to plan carefully to manage risk
by, Jackie Clark
China recently granted certain trade concessions, including suspending tariffs on U.S. pork, allowing for an increase in U.S. pork exports to the country.
“A resolution with the U.S. could be good news for Canada eventually,” said Maurizio Agostino, the chief commodity strategist at Farms.com Risk Management.
In the meantime, producers must decide whether to be patient and see if tensions with China will be fully resolved, or if they want to take advantage of the current boost in market prices, he explained.
When weighing their options, producers must also understand the seasonal increase in pork supplies in the winter and evaluate whether the current rising demand can keep up. Additional concerns like the risk of African swine fever outbreaks expanding or arriving in North America, as well as some U.S. packers enforcing restrictions on products used to improve feed efficiency must be considered too, he added.
In the pork market, “there are so many things that can go wrong, so it’s all about managing risk,” Agostino said.
So, he encouraged pork producers to consult an expert to help make informed marketing decisions.
In Ontario, “Packers used to shore futures for farmers, but now most farmers sell in the cash market.” To give themselves more options, Agostino “highly recommended” that producers work with “brokers to shore futures.”narvikk/E+ photo