We have been chewing through a lot of pigs and the cash hog market have rebounded in the face of those numbers. In return, we have also seen futures increase. In particular December 2017  rebounded nicely  off of lows  around $56.50 and currently just under $65.00. We have all heard the term ”rewarding the market” well here is your opportunity. Depending on basis and grades that will be very close to $50.00/cwt.  Not many times can you get a chance to sell hogs in December for $50. I see this as an opportunity to sell at least a good portion of hogs for November and December deliveries.

I see an interesting dynamic coming, as more packers are basing at least a portion of the way they pay for hogs using the carcass cutout values. December is a usually a very large spread from carcass values to lean hog prices. To take full advantage of this larger spread it makes the most sense to use straight hedges for December time period instead of forward contracts. When you pull those hedges and sell those hogs you will be able to take advantage of the higher carcass cutouts values. On the same thought during summer months when that spread between carcass values and lean hogs narrows we should take advantage of forwards contracts over straight hedging.

A quick note about corn prices. We have a huge amount of corn coming at us. Buying corn as needed seems to be the best strategy. Soybean meal is a little different story. Meal futures have crept higher in the last 30 days. I am betting we will see a retest of $300 soybean meal yet this harvest  and that is something I would lock in.

Allan Bentley, Sales Representative, Genesus. 

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