Tyler Fulton director of risk management with HAMS Marketing Services said profitability in the swine sector through this winter and into early spring will depend mainly on feed grain prices. 
Summer – fall is when the cash hog supply tightens due to typical seasonal trends and lower growth performance in the hot weather, especially in the U.S. Midwest, pushing cash hog prices to some of the highest levels in years. 
“We’ve got Canadian cash hog prices averaging between 260 and 280 dollars per hundred kilograms, which is phenomenal. Profits are a bit more nuanced. Much will come down to the cost of feed grains.” 
Fulton said commodity prices have also gone through the roof making it more challenging to turn a profit in the last six months. However, even with those elevated feed grain prices, it is squarely in the profitable territory as to how things pan out for the rest of this growing season. Also how long do the cash prices hang on at the current levels? 
“Right now, the forward contract prices suggest we start to drop off by the end of August and likely lose easily 50 dollars per CKG over the next month and a half or so.” 
Fulton said during November and December, the industry expects to deal with the heaviest supply of hogs, causing prices to drop well under 200 dollars per CKG but that is historically still an excellent price for that time of year.  
“The profitability will depend on whether or not we get a break in some of those feed grain costs.” 
Therefore, he advises pork producers to lock in hog prices for the early winter to early spring months for about 25 percent of their production. The forward probably benefited from the cash strength.  
“It makes sense to take some risk off the table and price possibly 25 percent of your production at current prices just because things could start moving lower in a hurry.”
Fulton said the domestic demand for pork continues strong. Of course, the unique economy and inflationary situation have their effects, but pork is in a good position because it is not the most expensive or least meat protein.  
“So, it tends to not see quite the same swings as chicken and beef. Current evidence suggests it’s running fairly strong with strong belly and loin prices in the U.S.”  
Exports-wise, it’s a mixed bag with slow activities coming from China due partly to recovering from African Swine Fever slowing down their pork imports dramatically. But Japan and Mexico are solid markets with positive contributions to value and volume exports. •
— By Harry Siemens