June 20 (CNS Canada) – The recent rally in U.S. hog futures offers hedging opportunities and attractive cash prices, but Tyler Fulton at Hams Marketing tempers optimism for the longer term outlook.
The CME July lean hog futures settled at 85.00 cents per pound on June 20, marking the highest point for the front month contract in the past year.
“We have advocated for hedging, particularly for the fall and winter timeframe,” Fulton said.
He cautions that the current rally is driven largely by the domestic situation in the United States. The problem with relying too much on that, he said, is that North America’s currently strong market depends a lot on continuing strong pork exports.
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He said the U.S. domestic situation looks strong for the next six months with summer barbecue season underway and two new processing plants expected to begin operations this autumn.
That added competition for producers’ hogs could mean good things for farmers in the short-term, he said.
But all that pork that the slaugher plants produce has to be sold and that means exports must play a key role.
While U.S. pork markets outside of China are putting up good numbers and supporting prices for the time being, Fulton said any concerns over the North American Free Trade Agreement, a border adjustment tax, or other issues would cool U.S.-Mexico trade, which would impact the overall market.
