The Director of Risk Management with HAMS Marketing Services, is advising pork producers to look at forward contracting, especially for the fourth quarter of 2019.
A typical year would see live hog prices starting to cycle higher heading into the spring but a higher than expected availability of slaughter hogs could be a factor this year.
Tyler Fulton, the Director Risk Management with HAMS Marketing Services says with the heavy supply we're dealing with now there is concern that we won't see the typical run up in the cash market, especially if we start putting a lot more pork into storage.
Clip-Tyler Fulton-HAMS Marketing Services:
Beyond the summer time frame, I still think that there's good reason for optimism throughout the summer time frame.
I think futures values are good value at the low to mid 80s in terms of U.S. futures values but probably the greater value lies in the October, November, December forward contract prices that reflect a significant premium over what we typically see in cash values at that time of year.
As a result of that premium that's being offered in that fourth quarter we think that producers should probably consider taking some protection in that latter time frame, especially due to the fact that we know that there's a heavy supply that we're dealing with and it's still very uncertain as to what is going to happen with markets and export markets in particular in that time frame and so if you can lock in, secure a decent profit and that is a profit I think at current values, especially given that time frame.
We think that it's prudent to price as much as 40 percent of your production.
Fulton says futures values are substantially better than two to three weeks ago, with most of the summer month futures having recovered to roughly half way back to their highs but there's still a lot of uncertainty and it's volatile.
Source : farmscape