Meat Industry INSIGHTS Newsletter

970621 Fletcher's to Consider Hog Futures to Protect Expansion

One of western Canada's largest hog processors said it would consider hedging its price risk on futures contracts in hog carcass cuts not currently available.

"One of the limitations for a packer buying his hogs forward is the ability to sell his finished goods forward and that's what we're missing right now," Fletcher's Fine Foods Ltd VP Greg Whalley says.

Canadian packers currently hedge by using the Chicago Mercantile Exchange's cash-settled lean-hog carcass and pork belly contracts.

Asked whether Fletcher's would hedge on a lean, barley-fed hog futures contract now being drafted by the Winnipeg Commodity Exchange, Whalley said: "There's very little we can sell forward. We can sell bellies on the Merc, but there isn't much opportunity to sell other cuts forward so we could properly hedge," he said.

Fletcher's invested C$23 million late last year to expand the annual hog kill capacity at its packing plant in Red Deer, Alberta, to two million hogs from one million. The expansion was done with a view to increase pork exports to the Pacific Rim and the U.S. to between 40% to 50%.

Japanese consumers buy hog loins while Korea is a noted consumer of hog bellies.

Whalley said most Prairie pork packing in the future would likely be done under long-term contracts with producers.

This Article Compliments of...

Press Here for Info on Setting Your Own Web Site

Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
Web Site: