MarketsFarm — The hog sector has found itself caught up in the general uncertainty of many commodity and financial markets — making it more difficult than normal to predict where values could be headed.
“We’re seeing a ton of volatility and it feels like we’re in a bit of transition on supply versus expectations,” said Tyler Fulton, director of risk management with Hams Marketing in Manitoba.
The demand side is being influenced by numerous factors including domestic inflation and wider geopolitical issues. Fulton said those outside factors likely had less of an influence on hogs and pork than other commodities but were still leading to an unpredictable market.
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Seasonal price trends in the hog sector would typically see prices rise through the summer months, but “we’re not seeing that this year,” he said.
“Over the past two months we’ve seen counter-cyclical moves… which has analysts and market participants questioning the driving factors behind everything.”
Given that background of volatility, “the message in this environment is ‘Focus on your margins,’ not just on the hog value side,” Fulton said.
In a year like this, he said, it was possible for a producer to secure better-than-average pricing that would still result in negative margins if feed inputs were too high.
In the context of normal seasonality, there will probably be opportunities later in the fall, he said. The heaviest hog supplies are typically seen in the November-December timeframe, but the markets haven’t discounted that yet.
“It’s not a business for the faint of heart this year.”
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
