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Managing risk while hog market remains volatile

Pork producers are encouraged to use discretion when navigating current volatility in the hog market.

Compeer Financial swine specialist Kent Bang says there could be excellent returns over the next 12 months as the African swine fever outbreak potentially drives prices higher.

“Have a good discussion about your strategy with those you make decisions with, and especially include your lender in that if you’re talking about futures positions and the capital needs to fund margin calls if this market continues to run higher.”

He tells Brownfield many of the producers Compeer works with are using options, futures hedges, or contracting directly with packers.

“Option premiums have been very high due to the volatility, so many producers are concerned about further market moves and funding margin calls.”

Bang says the unprecedented runup in hog prices over the last six weeks represents a $50 to $60-dollar improvement in profitability per head.