High supply and uncertain trade pressure US hog markets

HAMS Marketing Services says the trade situation with China continues to add a higher level of uncertainty to an already volatile North American hog market.
calendar icon 14 August 2019
clock icon 3 minute read

Live hog prices have remained extremely volatile throughout 2019. Speaking to Farmscape, Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says as the result of large US hog supplies and increasing production, the value of any hogs not under contract is dropping rapidly but, on the pork side, the past two weeks or so have seen added support.

"That's led to a divergence in cash hog pricing because some producers are referencing that pork price that packers are selling for while others that don't have a secured contract, those values are dropping very sharply," explains Fulton.

"There's a great deal of uncertainty and it's a unique circumstance to see these markets moving in opposite directions.

"I would say that most traders would view the Chinese situation as being the only way to avoid really significant losses in pig prices because of the abundant supply of hogs, particularly in the United States.

"With these barriers to being able to capture those opportunities in China that relate to the losses due to African swine fever, we find ourselves in a position where we know fundamentally that there's opportunities there.

"But there's just a huge amount of uncertainly as to when or if we as the North American hog industry are going to be able to capture that to be able to secure some of those extra sales because of that uncertainty on the trade agreements with China."

Fulton says, in terms of price protection, the majority of producers are well positioned moving toward the fourth quarter and, at current prices, he recommends holding firm unless we see even a ten percent move in some of the 2020 contracts.

© 2000 - 2022 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.