Pork Producers Advised to Take Advantage of Excellent Forward Contracting Opportunities

Farmscape for January 6, 2021

Full Interview 9:06 Listen

The Director of Risk Management with HAMS Marketing Services is advising pork producers to take advantage of excellent opportunities to lock in profitable forward contracting prices. Disruptions in the supply chain caused by COVID-19 throughout 2020 negatively impacted the price producers received for their hogs resulting, for example, in losses ranging from 20 to 30 to 40 dollars per pig in June-July.
Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says early evidence suggests 2021 will be a lot better and, right now, producers are very active in hedging the summer months.

Clip-Tyler Fulton-HAMS Marketing Services:
We know that we can expect a fairly large U.S. hog slaughter over the next two months with expected weekly kills of around 2.6 million hogs. To put that into perspective, compared to three years ago, that’s a 10 percent jump for that time frame. It’s not typically the peak season by any stretch but what we know is that we’ve been on a fairly good stretch of growth and that maybe it’s this year coming up that we’ll start to see a little bit of moderation in that trend and, hopefully as a result, see some more sustained higher prices into the fall months.

So producers need to be keeping tabs and even keep a benchmark as to their expectations for this fall and the latter half of 2021 and be prepared to cover off some of that price risk by taking forward contracts for example at hopefully profitable levels.

Fulton acknowledges COVID is not completely behind us and we could still see some negative impacts but he’s optimistic the supply chain will be able to work through any disruptions and there are indications that producers might be able to recover some of the equity they lost in 2020.

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