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Canada Hog Market - No Joy In Mudville

31 October 2016
Genesus - The first power in genetics

CANADA - For most hog producers in the small patch that is Southwestern Ontario, those that are also dirt farmers have had harvests that have gone quite well, writes Bob Fraser – Sales & Service, Genesus Ontario

Weather has been mostly cooperative with edible beans long complete, soybeans and winter wheat planting virtually complete, and corn rapidly approaching 50% done. Although there is always exceptions to every rule, most are reporting record or near record yields across all crops. However, as with every year (but particularly this year) rains could be patchy. There are certainly some that didn’t catch timely rains and therefore this wasn’t their experience, but that seems to be the minority.

The OMAFRA Swine Team (omafra.livestock@ontario.ca) has in their 2016 Ontario Monthly Hog Market Facts – Net Return for a Farrow to Finish operation in July of $34.87. In August, it has dropped drastically to $1.06. September has seen the erosion continue to -$12.86. So on the doorstep of the fourth quarter, a traditionally tough quarter for pork production, we look to some “tough sledding” ahead.

Many “talking heads” are painting apocryphal pictures of the chain being overwhelmed as we bump up against North American packer capacity. Although, as we know in this industry, virtually anything is possible, to us this seems unlikely. Packers like producers can be highly innovative in getting things done particularly when they’re enjoying the tremendous margins they are currently. Our guess is all the hogs find a hook.

Below Compiled by the OMAFRA Swine Team (OMAFRA.Livestock@ontario.ca) is how things have been running for the last five weeks.

As Jim Long has stated, optimism runs deep in the Genesus culture. We’re arguably always “glass half full” people. We believe it to be a condition to sanity in this business. To that end, we believe that although the fourth quarter is clearly going to be no fun with perhaps the first quarter not a lot better, there is clear hope on the horizon.

Much has been rightly been made about the extraordinary amount of investment in packing expansion in the United States that is underway. It shows a commitment to the future of the industry on a scale that has not been seen in 20 years. Canada will clearly feel the ripple effect of all this investment, with the Clemens Group plant in Coldwater MI potentially of particular benefit to Ontario.

Also, it is to be noted that the Canadian packing industry has not remained idle either. Both Olymel and HyLife are making significant investment into the industry. In the last nine months or so, Olymel announced plans to invest about $144 million in the Quebec hog/pork industry focused on expansion, slaughter and processing. In October HyLife announced plans for $125 million in its main processing plant at Neepawa Manitoba and new finishing barns to supply it. Work is expected to begin in 2017.

Conestoga Meats in Ontario has plans for major investment in new holding barn facilities and kill floor.

Therefore appears that the hammer will ultimately switch from the packer to the producer in the supply/demand equation. One just has to get there. Hang in there, there are better days ahead!

 


To find out more about Genesus Genetics, please take the time to visit their website at www.genesus.com .



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