Hedging - Meat Price Risk
By: Craig Haymaker, Chief Operating Officer
Meat price risk persists in the marketplace as major proteins – hogs and cattle – continue to exhibit unpredictability with varying price outlooks from industry experts. This presents meaningful hedging opportunities for consumers.
Lean hogs volatility has come down considerably over the last six months. This follows a more recent, abrupt decrease in price that consumers are enjoying in the wake of the price surge felt earlier this month. Cheaper call options may benefit consumers in the short run.
Cattle prices have normalized and settled mainly in the low 100s after the steady price climb from COVID-related processing plant lockdowns in March and April. Recent cattle prices remain lower than the pre-COVID levels experienced during the 2019/2020 winter months. Consumers eager to lock-in prices out into 2021 using futures and swaps will appreciate the June ‘21, August ’21 and October ’21 prices that have been hovering at or below current price levels. See the Cattle forward curve below:
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Meet the Author:
Craig Haymaker, Chief Operating Officer