Posts Tagged ‘Marketing Challenge’

Thank you to everyone who stopped by the OMAF and MRA booth at the Ontario Pork Congress.

If you missed completing the sheet for the Hog Market Challenge or did not get to the Ontario Pork Congress, here is your opportunity to join in the fun and participate. All you have to do is complete the chart at the end of this post with your marketing decision for the 1st round and  email to me by Monday, June 23. The second round information will be emailed to everyone who signs up next Thursday afternoon.

Hog Marketing Challenge

To help understand how some marketing tools work the following simple hog marketing case study has been developed. It is meant to be a learning experience on paper only with no money or pigs involved (just your market knowledge and expertise). Participation is open to anyone.

The Situation:

  • On June 12th 1000 feeder pigs (@ 25 kg) valued at $112 each are targeted to be marketed the week of Sept. 29th to Oct. 3rd
  • On June 12th the estimated feed cost was $86 per pig with an estimated margin after feed and feeder pig costs of $52 per pig based on a projected $252 market pig value (estimated price of $223.94/ckg, 100 index).
  • The cash contract value of the market pigs will be determined using 101% of the base formula price for the week of September 29 to October 3, 2014 with an assumed index of 110, a dressed weight of 100 kilograms and a premium of $2 per market pig.
  • A death loss will be determined at the end by rolling one dice. Therefore the death and morbidity loss will range from 1% to 6% depending on which number is rolled.

The Marketing Challenge:

  • You will have four (4) opportunities to make marketing decisions prior to shipping week of September 29 to October 3.
  • Each time you may choose to do nothing, hedge with a lean hog future contract, hedge with a lean hog put option and/or forward contract.
  • The first marketing opportunity is outlined below. The second marketing opportunity will be emailed June 26th. The third and fourth marketing opportunities will be emailed in July and August.
  • The final outcome and results will be emailed in October.

The following assumptions are being used:

  • One lean hog futures contract or put option contract is assumed to be 180 market hogs. The noon hour Bank of Canada exchange rate will be used to convert U.S. funds to Canadian funds.
  • A maximum of 75% of the hogs can be forward contracted.
  • To determine the final outcome, market information on Thursday, October 2nd will be used.

For further information or questions contact:


Round #1 – Marketing Decision – June 18/19 (Mark X beside your choice and indicate the number of pigs if choosing to hedge or forward contract.)


Marketing Choice X Number of Pigs
Do Nothing    
Hedge with Futures by selling October 2014 Lean Hog Futures @US$108.40/cwt    
Hedge by purchasing October 2014 Lean Hog Put Option @ strike price US$108/cwt @ premium US$5.000/cwt    
Forward Contract @ C$220.86/ckg, 100 index with a historical basis range of -$7 to $6    



  • Hedge with futures – 180 pigs per futures contract
  • Hedge with put options – 180 pigs per put option contract
  • Forward Contract – maximum of 75% of the pigs can be forward contracted (i.e. 750 pigs)
  • 1,000 pigs with a potential death loss/morbidity of 1 to 6%
  • There will be 3 more rounds to make a marketing decision via email



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Stop by the OMAF and MRA booth (A3/A4 in the Agriplex) at the Ontario Pork Congress for a visit and take on the Hog Marketing Challenge. It is meant to be a learning experience on paper with no money or pigs involved but using real time market information. Put your market knowledge and expertise to work and learn how some marketing tools function.

You can choose from four potential marketing decisions based on pigs put on feed (theoretically) this week (June 12th ) to be marketed late in September. There will be 3 more times for potential marketing decisions emailed to those who participate. Each time you will be able to decide to:
• choose to do nothing
• hedge with a futures contract
• hedge with a futures put option
• forward contract

The final outcome and results will be emailed in early October.

Put your marketing expertise and knowledge to work and stop by the OMAF and MRA booth (A3/A4 in the Agriplex) at the Ontario Pork Congress.


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