Managing Your Risk During Uncertain Times
Feb 15, 2020
Steve HoeferCountryside Feed Sales & Nutrition Professional
Independent pork producers have had a tough go in the market this past year, with very little margins to speak of, or even significant losses at times. It can be a difficult time to consider what marketing options are available to you.
At the 2020 KSU Swine Days, Joe Kerns with Kerns & Associates presented his information on the outlook for the swine industry for 2020 and beyond. All producers know the 4th quarter of the swine calendar is a difficult time to hold equity together due to burdensome supplies. We live in an industry of overproduction with heavier weights, increased supplies and technologies that keep adding more pigs and weight through the supply chain.
Joe’s presentation primarily focused on the fall of 2020, with the emphasis on the available shackle space and total projected pigs coming to market. The reality is that in the past 2 years, shackle space has increased to handle the increases in production. Unfortunately, no such increases will take place this coming year.
Therefore, you need be in communication with your packer regarding the supply of pigs you plan to bring to market. Be certain you have a place to go with all your production. The predicted of number of pigs coming to market looks to exceed the available spaces to harvest the expected production by 1.6 percent. Packers are currently enjoying very healthy margins, so they’re running at maximum capacity already. The problem lies in what we will do with an extra 45,000 market hogs that don’t fit into the supply chain. The last time this set of circumstances culminated was the fall of 1998. We all remember the hardships that created.
In order to mitigate your risk, you need to:
1. Know your cost to produce your product.
2. Utilize any and all resources to help you manage that risk.
At Countryside Feed, we have the expertise to help you determine your cost of production and we can assist you in developing a market risk plan. Don’t feel like you are alone in the battle to protect your business. We’re here to help! Think of Kevin Lueger and I as your resources that will assist you in facing the challenges ahead. Feel free to contact either of us to see you through this difficult season in the swine business.