Hog Supply Still Drives Price

ONTARIO - The Ontario Pool price has been below year ago levels for approximately 13 months, and since the start of 2003, producers have faced prices that are roughly $27/ckg lower than the same time last year.
calendar icon 4 April 2003
clock icon 3 minute read
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Ontario Pork Logo When hog prices have been this low for this long, it's natural to start looking for reasons. As always, there are a number of culprits. Trade issues, an abundance of US chicken and a strong Canadian dollar have all put pressure on Ontario hog prices. These and other explanations account for some of the down turn, but there is another familiar reason: North American hog supplies have remained high.

In 2002 and during the first 11 weeks of 2003, average hog supplies have been above year ago levels in the US, Quebec, Ontario, and Western Canada. The table below shows how the relationship between US hog supplies and prices continues to hold: prices dropped sharply in August and September as hog supplies increased, and then in January as the weekly US hog run dropped down to around 1.9 million animals, prices increased. Recently, as weekly US hog supplies have been steady, hog prices have been stagnant.

Fortunately US hog inventory reports and futures markets are suggesting that the relationship between price and supply will begin to work in producers' favour. The US breeding herd is about 3% smaller than at this time last year and this should eventually mean lower finished hog supplies. On March 19, 2003, futures markets suggested hog prices could reach $160/ckg by June; this would put hog prices $20 above 2002 levels.

Source: Ontario Pork, By Patrick O'Neil, Sales Team Manager, Ontario Pork, April 2003

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