Lower Production Cost Expected to Cushion the Blow of US Antidumping Duties

by 5m Editor
21 October 2004, at 12:00am

CANADA - Farm-Scape: Episode 1627. Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council and Sask Pork.

Farm-Scape, Episode 1627

Sask Pork projects the US antidumping duty on live Canadian hogs will push prices down in Canada but lower production costs will cushion the impact.

A 14.06 percent preliminary antidumping duty on Canadian live hogs shipped into the US took effect yesterday.

Sask Pork Industry and Policy Analyst Brad Marceniuk says, while the duty will push Canadian prices to the edge of profitability, an expected abundance of feed is expected to lower production costs.

"The new duty on Canadian live hog exports to the United States will push Canadian hog prices downward.

Based on the current Saskatchewan market weight prices the 14.06 percent duty represents about 20 dollars per hundred kilograms, or about 19 to 20 dollars per market weight hog.

We believe Canadian packers will respond by pushing domestic prices downward but we're not sure if they will push prices down by the full 20 dollars per hundred kilograms.

While the duty will be taken off of Canadian live hog exports to the United States, the final decision will be made in march of 2005 and will determine if Canadian hog exporters will get any of this money back.

If the final determination is positive, any duties collected will be returned to the Canadian hog exporters.

Canadian prices are expected to further fall into the fourth quarter as a result of the dumping duty but lower feed costs over the last month or two have helped producers remain profitable.

While the prices in the fourth quarter are expected to drop, profitability will be reduced but should be near break even levels because of lower production costs due to lower feed prices in Western Canada."

Marceniuk says key influences in addition, to the duty and production costs, will be US slaughter numbers and the value of the Canadian dollar.

He says another positive factor is the continuing strong demand for pork.

For Farmscape.Ca, I'm Bruce Cochrane.

5m Editor