A Senior Risk Management Analyst with HAMS Marketing Services says, despite the economic uncertainty created by the Trump administration’s threatened trade actions, market hog prices have remained strong. While uncertainty resulting from U.S. President Donald Trump's threatened imposition of new tariffs has pressured futures markets, cash markets for hogs have remained strong.
Paul Marchand, a Senior Risk Management Analyst with HAMS Marketing Services, says cash prices for live market hogs delivered to Canadian processing plants hit the highest base price on record in week one of this year and then followed seasonal trends but we're still waiting to see how contractual relationships will change.
Clip-Paul Marchand-HAMS Marketing Services:
I think you have to really walk it back and try to figure out what a producers' goal is over the next couple of months. The marketing conditions are not normal and do you want to protect yourself over this time frame.Because there is a positive margin to be had right now with forward contracting levels, I think producers should be having discussions with their marketing teams, production teams, management teams to figure out if they want to take that price certainty and risk off the table for now and be just comfortable with that margin they're going to be making over the while or if they want to wait a little bit to see how things are going to pencil out.
Like we talked about earlier, USMCA has so far shielded pork producers from any sort of tariffs.Not that we're concerned about tariffs per say, we're more worried about the retaliation because our base prices are set in the United States, because Mexico and Canada have no reason to retaliate right now, the North American at least market is fairly stable but does it remain so and that really is the question.The problem is its a very much wait and see environment and, with risk management as a tool, you may not capture the premium market prices here but if you want to sleep at night, it might be best to figure out if those margins work for your operation right now and if you want to take some of that risk off the table.
Marchand acknowledges, just as easily as prices could tank because of a lack of market access, governments could claim they've negotiated a bunch of deals, markets return to normal and all of the futures contracts made today would be out of the money so it's an individual and sector specific decision that gets made.
Source : Farmscape.ca