Tyler Fulton the director of risk management with HAMS Marketing Services advises pork producers to lock in their feed costs as they forward contract their hog production. 
The North American hog sector has started transitioning from the tight hog supplies of summer as numbers ramp up and are in line with those of the last year and an average of the past five years. Nevertheless, North American pork demand remains the main factor influencing pork prices. 
“One thing to note is China’s diminished effect on North American pricing so it’s more the domestic market that’s driving pricing now. So we do think that there could be some price pressure.” 
The reality is the futures, and the forward market that’s priced off of the futures exceeds any previous year’s forward prices at this time of year. 
He thinks there are some good opportunities to secure solid pricing but coupling that with feed purchases because the risk lies in that feeding margin. 
“The value of the feed ingredients you need to purchase is relative to the value of the hogs you’re selling.” 
As is so often the case working in the Canadian pork producer’s favour is the weaker Canadian dollar but it’s also impacting the cost side. So it is important to match those pricing decisions on feed and hog prices.  
Fulton said the heavier supplies typically means pressure on prices but pork cutout values remain firm. All indicators show pork continues to perform well in this inflationary environment and is well positioned over the next four or five months to perform reasonably well in the context of the heavier supply. 
Fulton said access to labour would be the biggest challenge as the pork packing plants gear up for the heavier fall, winter, and hog production. There is some volatility due to holidays, particularly in the U.S. plants, but he doesn’t expect any significant slaughter capacity constraints with a negative impact on prices during the heaviest hog run time frames over the next two to three months. 
Fulton acknowledges the underlying concern is the degree to which the plants can run at their rated capacity given the labour issues. 
“Labor continues to be a real thorn in the industry as it works to manage through COVID and through these inflationary times.” •
— By Harry Siemens