Pork Commentary: Canadian Pork Industry Threatened31 October 2012
CANADA - The Canadian sow herd has decreased already 20 per cent (300,000) over the last four years, writes Jim Long.
Canadian Pork Council Press Release: At a national meeting of provincial pork associations this past week, it was confirmed that Canada is threatened to lose many of its hog farmers in the coming year, according to a report from the Canadian Pork Council (CPC). This decline could equate to a shortage of Canadian produced pork products for its consumers and jeopardizing $13.4 billion in economic activity associated with hog production.
“It was clear to me from this meeting that provincial hog producers expect the Canadian Federal Government to adjust existing programs and not put a risk to the entire pork chain complex.” States CPC’s Chair Jean – Guy Vincent. “The historic drought in the United States corn belt this summer resulted in a drastic change in the economic situations facing hog producers.”
The Canadian sow herd has decreased already 20% (300,000) over the last four years. It has not been a good business over that time frame.
The Canadian dollar at par with the U.S. dollar has been a real handicap for Canadian producers over the last four year period with U.S. country of origin regulations compounding the situation.
The CPC is correct that feed prices have appreciated further since the U.S. drought but they were already historically high. Many Canadian hog producers are also grain producers and for many this year their yield to price for grain combination is their best ever. The high price of feed is not only a Canadian phenomenon but global in nature.
The problems for Canada’s swine industry are very real. You need to only follow the financial challenges of Canada’s second and fourth largest hog producers Big Sky Farms and Puratone Corporation to see that there are fundamental challenges to profitability.
We expect Canada’s swine industry has shrunk and will continue to shrink as producers leave the industry. Canada will not be short of pork as about 50% of Canada’s production is exported. What the shrinking herd does is it cut pork and pig export volume. Less supply always has and always will lead to higher prices in a world of increased demand.
Small pig prices continue to rise from the pit of hell. Last week cash early weans averaged $39.07 up from only $8.00 less than 6 weeks ago. 40 pound feeder pigs have jumped from the mid - teens to $39. That $30 per pig increase on early weans is a life saver for many producers as it pushes them to break even. The price increase is a reflection of seasonality, strong hog future prices mid-2013, and decrease in supply from sow herd liquidation. We expect cash early weans to reach $50 in the next few weeks.
Sow prices are increasing. Last week sows went up 6 cents per pound to the mid - 50s after being in the 30s a few weeks ago; sows are still 10 cents a pound less than a year ago. The latest U.S. weekly sow slaughter total was 62, 699 a level we believe indicates liquidation of about 5,000 per week.
After a summer of drought, the U.S. mid – west is getting good rains. The price of corn and soybeans where they are is it premature to start discussing 100 million acres of U.S. corn next year? We farmers can’t stand prosperity, corn farmers like hog farmers will reach to pricing opportunities, they will produce.
This crop year’s total U.S. corn exports of 422,000 metric tonnes is almost half of last year’s same time frame of 805,000 metric tonnes. High prices are cutting demand.
When the U.S. federal election is over and Iowa is not in play in the Electoral College will there be ongoing support for mandated ethanol use?
In a couple of weeks we will be attending and exhibiting at Euro Tier in Hannover. You can visit us at the Genesus display within the Canadian Swine Exporters Exhibit. Europe has been increasingly important for Genesus with genetic production facilities in Spain, Czech Republic, and Russia.
|Author: Jim Long, President & CEO, Genesus Genetics|
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