Recent Rally in Cash Hog Prices Potentially Short Lived

May 07, 2013

By Bruce Cochrane

H@MS Marketing Services is advising pork producers to consider forward pricing a significant portion of their summer and fall hog production.

Within the past two weeks or so we've seen a surge in the cash market for hogs, suggesting within a month we could see profitability creeping back into western Canadian hog operations.

Tyler Fulton, the director of risk management with H@MS Marketing Services, says the cash market has been well supported and there are prospects for reduced feed prices but there's still a huge amount of uncertainty, largely due to uncertainty over exports.

Tyler Fulton-H@MS Marketing Services:

The cash market in the U.S. has really performed very well.
It's fairly typical to see a spring rally in hog prices coinciding with a reduction in hog supply as well as typically better grilling demand.

Certain cuts start to see appreciation in values kind of in line with barbecue season and that filters back to hog prices.

I think producers should really be considering pricing a good portion of their summer and fall month production.

The most recent export data shows that we are in very uncertain times and that producers should not be kind of lulled into inaction by the recent cash market rally.
We have seen some support and I think arguably we've got a good pricing opportunity in the context of what I would call a very uncertain market right now.

Fulton notes U.S. pork exports declined by about 18 percent in March , the worst showing in several years, and it stems from a lack of any shipments to Russia due to its ban on Ractopamine and a 36 percent reduction in exports to China, which has changed the dynamic of North American hog markets and puts this tenuous improvement in profitability at risk.

Source: Farmscape

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