Farmscape for March 8, 2018
In anticipation of higher hog supplies and a potential trade war, the Director of Risk Management with h@ms Marketing Services is advising hog producers to forward price at least a third of their production.
Talk of U.S. tariffs on aluminum and steel, which could lead to trade retaliation on U.S. exports including pork, are depressing the deferred months lean hog futures.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says a three cent drop over the past three weeks in the value of the Canadian has propped up Canadian forward prices and provided an opportunity to hedge.
Clip-Tyler Fulton-h@ms Marketing Services:
The new theme of greater protectionism in the United States is concerning.
I don't think any agricultural producer is positive about this from the context of its impact on commodity prices so I think that's really the focus of most people's decisions right now to be hedging.
We're generally advocates of pricing from September to December, at least a third of their production.
Just for some context, current forward prices are still trading nearly 10 dollars per CKG higher than what the cash price was in that same time frame last year.
When you combine that heavy supply consideration, that expectation that there could be five percent more pork in the market at the time and the big issue with respect to export demand and the potential for a possible trade war, all that uncertainty really makes you believe that securing those prices now while there's profits to be had is probably a good approach to take in such uncertain times.
Fulton notes, while domestic demand for pork has remained strong, the uncertainty lies on the export side.
For Farmscape.Ca, I'm Bruce Cochrane.
*Farmscape is a presentation of Sask Pork and Manitoba Pork