CANADA - H@ms Marketing Services is advising Canadian pork producers to consider forward pricing to protect themselves from potential drops in live hog prices during the third and fourth quarters, writes Bruce Cochrane.
Although live hog prices typically rally at this time of year, as hog numbers tighten during the summer, prices have remained surprisingly stable.
Tyler Fulton, the director of risk management with h@ms Marketing Services, reports over the last 3 weeks the US hog slaughter has been running 7 to 8 per cent larger than 2013 levels.
Tyler Fulton-h@ms Marketing Services:
I say 2013 because 2014 was a real anomaly.
With all of the losses related to PED it makes it a really difficult benchmark to compare against and so I go back to 2013.
To look at a 7 to 8 percent increase in hog supply at this time of year relative to 2013 is a surprise to say the least.
It's concerning because, into the summer time frame, we're not going to run into packer capacity issues just because growth rates kind of slow down and hog numbers typically tighten up.
But the time we move into September through November it starts to become a big issue.
The million dollar question is whether or not the hog supply will maintain these growth rates over 2013 levels.
If they do then we will probably have several weeks where the hog supply could exceed the capacity to kill them.
In the event that we have weeks where there's more hogs out there than U.S. packers are able to kill, prices fall precipitously.
Fulton says price drops could be significant during certain weeks during the third and fourth quarters which suggests taking price protection at current prices would be prudent for Canadian hog producers.
ThePigSite News Desk