Fixed Forward Pricing Program (FPP)

Hog forward contracting is a service provided by Manitoba Pork Marketing that allows producers to enhance and stabilize their income.
Forward contracting is a pricing tool, which promises to contribute to your long-term security and growth.

Forward contracting offers many benefits to you.
Contracting enables you to lock in a hog price up to 12 months in advance, thereby reducing price risk in an open market based commodity. In addition to maximizing profit and reducing risk, forward contracting also provides a range of benefits such as marketing information and the opportunity to group hogs in order to get a higher price.
Participants are able to obtain up-to-date information on price trends, historical and cyclical hog charts and market information from various North American sources that is continually summarized in our daily Hog Margin Outlook.

Producers can call Manitoba Pork Marketing between 9:30 a.m. and 12:30 p.m. to receive hog prices that can be locked in for up to 12 months into the future.
Forward contracting prices are based on the Chicago Mercantile Exchange lean hog futures.
These prices are then converted to reflect the applicable Manitoba pricing formula.
Prices are adjusted on an ongoing basis while the market is open in order to reflect changes in the hog futures market.

If you want a maintenance free marketing tool that will follow the market until prices arrive at a more favorable level, Manitoba Pork Marketing also provides Target Pricing Contracts.
This program has been widely accepted by Manitoba hog producers with its ability to set future price targets without having to watch the market on a continual basis.
This contract allows you to take full advantage of price swings in the marketplace.

As you can see by the adjacent graph, Manitoba Pork Marketing cash prices swing due to various market factors. By incorporating forward contracting into your marketing strategy you can achieve a more stable, less volatile, income.
This comparison of potential hog prices contrasted with the cash prices clearly illustrates the merit of a Forward Price Contracting Program.
The potential forward contract price in this scenario was based on contracting 50% of production three to six months in advance.

Although our Risk Management Department observes and reports the current market conditions, ultimately, the decision to contract is yours.
The contract is binding and considered valid from the moment a verbal agreement is reached between the producer and the contractor.
Contracts are confirmed in writing and sent to you to retain for your records. Settlements for contract hogs are based on the 100-index price along with the standard quality premiums and discounts in effect at the time of delivery.