The Director of Risk Management with Hams Marketing Services, Tyler Fulton recommended a prudent approach to forward-pricing hogs for the first half of 2022. 
Although cash hog prices continue to face the price pressure typically in the fourth quarter, things still look very good from a futures standpoint. With the U.S. Thanksgiving holiday, which typically marks one of the lowest levels of cash pricing over the year, hopefully, see some improvements.  
“With so many moving parts out there, it seems unlikely that one can call the market and key in on the one factor that’s going to make the difference. There’s just so much that’s so dynamic and so much we don’t know until it happens.” 
With producers able to cover at today’s dollar values at around 20 percent to start, then build into that in increments if the price continues to make some improvements. 
Fulton said there are scenarios where pigs are trading at close to 200 dollars per head on average across the first six months of the year, which is good for the producer despite the higher feed costs. The cash market has mixed influences with many factors with a split in the cash market with prices for contracted hogs holding up better than those delivered to the packing plants without any contracts in place. 
With U.S. hog numbers running three to four percent lower than one year ago, the industry manages the hog slaughter but is seeing significant seasonal price pressure. 
“We see a split in terms of the difference in price for committed versus non-committed hogs. Any references to pork cut-outs are holding up much better than those delivered into a U.S. plant without any contract in place.” 
It’s that segment of uncommitted hogs and generally a tiny portion of the whole supply that’s drawing things down.  
“As we move up to these high production levels, it shows that the packers don’t want to pay that extra dollar for hogs that they need quite as much.” 
While the futures still look very good, feed costs and cost of production are extremely high given the high prices of soybean meal and corn, trading at close to 200 dollars a pig on average across the first six months of the year is still good. That’s a good scenario to be in but, in the context of the high feed prices, it’s not as good as one would think but still probably some opportunity there. 
Florian Possberg, a partner with Polar Pork Farms in Saskatchewan, said although feed costs more than doubled from a year ago, the outlook for North American pork producers for 2022 looks encouraging with the global supply of pork expected to be down in 2022. 
In October, China lost 1.2 million sows, equivalent to almost the entire Canadian inventory; from last December to June, the European Union lost 250 thousand sows and hog numbers are down in the United States. 
“In our back door here, our four-dollar barely a year ago is now over nine dollars and five and a half or six-dollar wheat is 11 dollars plus. So that’s our number one cost and globally feed costs have doubled or maybe even more.” 
So, while certain circumstances stressed prices in some areas, the cost of producing hogs rose substantially, mainly because of feed costs. 
“Our hog price right now is probably somewhere close to what it was a year ago, but we did enjoy good prices during the summer.” 
That was different in places like China and the European Union, so those producers will be hurting a little, needing to see significant profits before they rebound. However, Canadian prices didn’t drop the production and should be OK in 2022, maybe even into 2023 for a period. 
Other than China, which may expand its pig production rapidly if they get significant profits, Possberg doesn’t foresee a great deal of sow herd expansion in any other part of the world. •
— By Harry Siemens