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Economist: prepare for the downside risk in hog markets

A livestock economist says there is more downside risk than upside potential in the hog market right now.

University of Missouri’s Scott Brown says despite the negative trade talk, hog markets posted another strong week of business and producers need to take advantage of higher prices when they can.  “Some of the trade issues that could come on top of what’s going to be a 4 percent increase in pork production for 2018 – it could be a tough ride at the end of 2018,” he says.  “We do want to be paying attention to those opportunities to lock in some hog prices.”

Brown says risk management isn’t just locking in prices received, he says producers also need to watch the fluctuation of input costs, especially as the USDA has tightened ending stocks recently.  “We continue to see USDA trim on corn and soybean ending stocks,” he says.  “If we keep tightening those up – we don’t want to forget the opportunity to take advantage of any cuts in feed costs that might be coming along.”

Brown says the added pressure from improving corn and soybean conditions throughout the Corn Belt and the negative trade rhetoric could drop prices and present opportunities for livestock producers to take advantage of lower inputs.