Combination of Factors Contributes to Improved Pork Industry Profitability15 July 2013
CANADA - H@ms Marketing Services credits the lower Canadian dollar, US inventory concerns due to PED, higher beef costs and improved US pork exports for improved profitability within the Canadian pork industry, writes Bruce Cochrane.
Earlier in the year many were predicting live hog prices would stall at between 165 and 170 dollars per 100 kilograms this summer but the situation has changed.
H@ms Marketing Services general manager Perry Mohr, on hand earlier this week for the official opening of H@ms new head office in Headingley, observes hog prices have climbed to 190 dollars per 100 kilograms over the past two to three weeks.
Perry Mohr-H@ms Marketing Services
Number one we've seen the Canadian dollar drop from parity to around 94 cents US right now so that's added a significant premium to Canadian hog prices.
We've also had an outbreak of PED virus in the United States which continues to grow and continues to add uncertainty to volumes of pigs not only coming to market today but into the future.
The third factor is the fact that US beef prices went to record levels and cost conscious consumers were able to buy pork considerably cheaper than beef so we've seen a surge in demand as a result of the large price spread that existed between beef and pork.
The last factor is I think that US exports are starting to pick up again.
We've seen evidence in May in particular that the amount of pork exported out of the United States was 94 per cent of year ago levels.
That's still below year ago levels but it's a huge improvement over the 85 per cent of year ago levels that were experienced in the first four months of 2013.
Mr Mohr estimates producers today are making 30 to 50 dollars per hog but the wild card is how long will that last.
He suggests the unknowns are the impact of PED and how many hogs that will keep from going to market, demand for pork and what happens with feed costs.
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