Tyler Fulton, the Director of Risk Management with HAMS Marketing Services in Winnipeg, MB said lower than expected slaughter hog numbers helped create an opportunity to lock in some very profitable prices. 
USDA’s quarterly Hogs and Pigs report September 24, showed that while the heavier weight slaughter hog categories are in line with market expectations, some lighter weight categories fell six percent from year-ago levels. The drop is a reflection of disease challenges in the U.S. and prices may firm up even more. The heavier weight categories are a little bit closer to expectations but the reality is recent hog slaughter levels are still down from year-ago levels. Generally, putting in slightly better than 2.5 million hogs per week is quite supportive.  
“We see more support on the pork carcass side with fairly tight supplies to meat and pork, in particular. But not as much on the uncommitted hogs still coming to market. And so, as a result, there’s some weakness on some of those prices.” 
For producers on a formula contract that commit those animals to a particular packer, generally, they see the benefits of those strong pork prices. So that’s probably a good part related to the tight supplies that this hog and pig report confirmed. 
“Interestingly the market reacted very positively. The Lean Futures price saw their largest single-day increase ever.”  
Usually, there are price limits as to how much the market can move and that’s still the case but, recently the U.S. Futures Exchange, the CME Group, changed the price limits associated with lean hog futures. It happened to be the first day the industry saw a limit move at these new larger limits. 
“Interesting that, in response to this bullish Hogs and Pigs report, the market moved pretty much bigger than ever before corresponding with some forward contracting opportunities.” 
Many producers took advantage of that mainly focusing on the winter time frame. But, unfortunately, there’s not a lot of action for the spring of next year yet. 
Fulton did not have an answer to how the processors are coping with their various challenges. There is no doubt ongoing implications from COVID, particularly related to the workforce in those packing plants. But, on the flip side, it does appear as though the U.S. is down from its peak.  
“Maybe there’s a better prospect that we’ll be able to make it through the fall, the critical fall timeframe, without too much disruption. But I think it’s pretty fair to say that COVID continues to throw a wrench into both the demand and supply sides of the equation.” 
At this point, there isn’t much new information on global pork demand. Mexico continues as a very strong importer of U.S. pork, and the pork demand is solid. However, there is a concern over container supply, which is a bottleneck in shipping pork, in particular, to Asia.  
“That’s a concern, but we’re in a pretty good spot from a demand perspective. On the domestic side, COVID is disrupting the normal flow of pork through the channels. Unequivocally, we’re coming off of one of the best pork demand equations so far this year in 2021. Unless things turn around, we’re looking at an exceptional year for pork demand domestically.” •
— By Harry Siemens