Farmscape for May 15, 2018
The Director of Risk Management with h@ms Marketing Services blames larger than normal U.S. hog supplies for a later start to the typical rally in live hog prices.
Spring time, when hog production typically cycles lower, is when processors chase hogs to keep their plants running near capacity creating a rally in live hog prices.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says hog numbers are starting to trail off but they are staying relatively high so the rally is a little bit late this year relative to the average.
Clip-Tyler Fulton-h@ms Marketing Services:
Processors are still running largely full production schedules during the week days.
Where they've really dialed things back is their weekend kill.
That's typically the first cuts that they make to their labor force.
Recent weeks has the U.S. slaughtering only about 40 thousand hogs every Saturday which is just a fraction of what they are at peak time when they are running even up over 300 thousand in the late fall or early winter time frame.
So there's some plant capacity with respect to supply versus current production capacity but that's pretty typical.
We are seeing some of the highest production that we have for this time of year and that's probably weighing a little bit on the wholesale pork market which I think is the real pivotal question of the next two months or so, in that how is it that the U.S. going to be able to deal with such large supplies relative to what's typical for this time of year.
Fulton anticipates solid strength over the next month but he says producers should temper their expectations and recommends capitalizing on any rallies and taking forward protection, especially for the last half of the year, when we expect the largest supplies coming to market.
For Farmscape.Ca, I'm Bruce Cochrane.
*Farmscape is a presentation of Sask Pork and Manitoba Pork