Tyler Fulton, the director of risk management with HAMS Marketing Services said the need for effective risk management strategies would be critical in 2022. 
Despite significant volatility throughout 2021 due to uncertainty over the pandemic, hog prices were good but record-high feed prices reduced profitability. Amid this continued volatility, pork producers will need to focus on risk management.  
“Follow a fairly standard plan, incremental selling especially in some of those higher periods of the summer and when the late fall months come available, covering some of those needs depending on where those values start.” 
There are scenarios where summer prices look favourable. From a historical standpoint, 250 dollars per market hog is attainable right now or very near obtainable in forward pricing. But corn, soybean and feed ingredient prices are exceptionally high, cutting back into the profitability potential. 
“We’re going to follow a fairly normal trend where the summer timeframe will be the profitable period. Then, moving into the fourth quarter of 2022, producers will have to buckle down and squeak out those margins if we can find them on the forward and the feed ingredient pricing opportunities.” 
Fulton said the need to do risk management is ever-present in this uncertain economic environment. 
One of the most significant factors driving hog markets is the impact of the global pandemic on pork processing capacity. In late 2021, slaughter hog production dropped, resulting in a decline in hog numbers and triggering a significant reduction of pork stocks, stimulating higher pork cut-out values. While that short supply will continue, the global pandemic influences the hog market. 
“In the short-term hog processing facilities are dialling back their production levels simply because they’ve struggled to maintain a full labour force in the context of the Omicron variant. It’s widespread, whether in the US Midwest with many packing plants but also in western Canada where, after the holidays, plants have dialled back production.” 
So far there have been no major disruptions, but the industry needs to move through these issues and learn to work with these constraints to remain current with hog supplies in the short term.  
Longer-term, the USDA’s Hogs and Pigs Report showed a general lack of any growth in market hog supplies for at least the next four months. However, looking further out the breeding herd will increase, resulting in larger market hog volumes as long as producers can deal with the disease disruptions that have plagued the industry over the last year. 
Fulton said these relatively tight supplies could result in continued support for pork cut-out values, increasing hog values. •
— By Harry Siemens