US Hog Prices Seen Aided By Smaller Canada Herd

US - U.S. hog prices will likely benefit from a small decline in the Canadian hog herd, about a quarter of which are exported to the United States as feeder pigs or slaughter hogs, livestock analysts said on Wednesday.
calendar icon 5 May 2006
clock icon 4 minute read

"Little or no growth in the Canadian herd means that the expansion phase of the hog cycle may be much less devastating to prices this time around," said Ron Plain, livestock economist at the University of Missouri. "Roughly a quarter of the Canadian pig crop is exported to the U.S. as feeder pigs or slaughter hogs," he said.

He said expansion of the U.S. swine herd is being slowed by high construction costs for new facilities and the permitting process linked to factors such as waste disposal and measures against ground water contamination.

Statistics Canada's latest inventory survey of the Canadian swine herd as of April 1 issued Thursday showed 1.6 million sows and bred gilts, 0.3 percent fewer than a year ago. Market hog inventory was down 2.4 percent at the start of April.

"The smaller swine herd reflects increased pig exports to the U.S., lower hog prices in Canada, problems with porcine circovirus and concern about the future profitability of Canadian hog production," Plain said. "Most of the increase in North American hog production during the past decade occurred in Canada," he added.

Dale Durchholz, market analyst with AgriVisor, said the Canadian data would be supportive for the U.S. market. "It might be a little friendly, but I think the more overriding important feature in the hog markets here in the U.S. and the red meats in general is chicken," he said. "It (Canada numbers) makes the market a little less negative."

The spread of bird flu in Asia , Europe and Africa has slowed poultry exports from the United States, building large supplies that are pressuring prices of all meats. The 2004 Canadian pig crop was 15.22 million head or 85 percent larger than the 1994 crop. During the same years the U.S. pig crop increased from 101.479 million head to 102.781 million head. The 2005 Canadian pig crop was 527,300 head smaller than the 2004 pig crop.

Plain also noted that Canada farrowed 3.4544 million litters in 2005, which was 1.4 percent fewer than in 2004. This was the first year-over-year decline in Canadian farrowings since 1996, he said. "It looks like 2006 farrowings may be close to last year's number," Plain said. Because of the close ties between our markets, Canadian hog prices track U.S. hog prices. But, because of exchange rate fluctuations, prices do not always change by the same amount.

For example, U.S. barrow and gilt prices in 2005 averaged 11.9 percent higher than in 2000. Manitoba hog prices were 9.1 percent lower in 2005 than in 2000, Plain said. The top five Canadian provinces in hog production are Quebec, Ontario, Manitoba, Alberta and Saskatchewan. The Canadian sow herd is nearly 50 percent larger than the Iowa sow herd, but Canada's market hog inventory is 15 percent smaller than Iowa's, Plain added.

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