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Pork Producers Well Positioned to Deal with Lower Prices Resulting From High Slaughter Numbers

US - The Director of Risk Management with h@ms Marketing Services says pork producers are generally well positioned to weather effects of higher than anticipated slaughter hog numbers this coming fall and winter, writes Bruce Cochrane.
calendar icon 13 October 2016
clock icon 1 minute read

The USDA's Quarterly Hogs and Pigs Report, released September 30, showed the number of hogs kept for marketing was much higher than anticipated.

Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says the higher than expected forecast raises the prospects that hog numbers will reach slaughter capacity, possibly by late November or early December.

Tyler Fulton-h@ms Marketing Services:

The US futures markets kind of preempted the report with significant declines leading up to the report.
Since then there's just generally been a weakness.

It's been a little bit more steady but we haven't seen any kind of support to the prices since the report came out.

To put it in perspective prices declined 10 per cent the two weeks leading up to the report so there was a lot of negativity built in we quite simply had confirmation that that negativity was founded.
That's where we sit today on the market.

The market does threaten to move lower but, as it sits right now, it's already heavily discounted from the current cash market and traders tend to be a little more cautious when you apply discounts in excess of 10 per cent from the current cash market level.

Mr Fulton says, because operations are independent and make their own decisions, the situation will vary from farm to farm but, in general, producers are feeling fairly secure in the positions they've taken in advance of this report.

He says, despite the erosion we've seen in prices, some producers are very well covered for the fall and winter months.

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