EDMONTON – Clint Rempel has been tracking the hog futures prices for the past couple of weeks on his own satellite marketing service.
Last week he added another tool to help him price his hogs.
On May 15 the Alberta Pork Producers Development Corporation, the province’s monopoly hog marketer, added a forward price contracting program to its list of services to farmers.
On opening day Rempel phoned the Edmonton office for the daily futures prices.
“I didn’t contract anything, but I compared prices,” said Rempel, of Grande Prairie.
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The best futures price he could see was $1.88 for July delivery and the board’s daily formula price was $2.04.
While the higher daily price gave him confidence he was getting the best price for his hogs from the board on that day, he is not ruling out the new futures program as a good marketing tool.
“It’s a good risk management tool for producers to use.”
Other farmers must have thought the same. There was a “significant amount of interest” in the program on opening day, said Ward Toma, economics and communications manager with the board.
While actual numbers are confidential, Toma said “some producers signed contracts” on opening day.
The Alberta program is an exact replica of the futures program designed and implemented by Manitoba Pork more than a year ago.
The program allows producers to deliver an agreed upon number of hogs within a designated month at a predetermined price. Producers can lock in a hog price up to a year in advance to help stabilize prices.
The hog contracts are based on the Chicago Mercantile Exchange futures market.
Rene Chabidon, assistant manager of Manitoba Pork, said they’re pleased with how the program has been working in their province.
During their last survey, 40 percent of the producers said they had used the program and 60 percent said they planned on using it.
“The level of satisfaction we are very pleased with,” said Chabidon, of Winnipeg.
“There is a level of comfort once they’ve used it and gone through a few contracts.”
While producers are interested in the program, bankers have really taken a shine to the service. For once farmers can tell bankers both their fixed cost and their final cost.
Alberta adopted Manitoba’s program in an effort to stabilize prices when producers could see the end of government stabilization programs, said Toma.
Central Alberta hog producer Paul Allers is going to take the wait and see approach to the price contracting program.
“My immediate plans are going to be to hang off. I’m not going to put anything on right away,” said Allers, of Strome, Alta.
