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Western Canadian Feed Grain Prices Expected to Rise

by 5m Editor
11 August 2006, at 10:46am

CANADA - Farm-Scape: Episode 2216. Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council and Sask Pork.

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Farm-Scape, Episode 2216

The Saskatchewan Pork Development Board is encouraging Western Canadian swine producers to secure feed supplies for this winter in advance of any anticipated price increases.

The latest cereal grain production estimates from the Canadian Wheat Board indicate barley production will be down by about two million tonnes from last year, making this year's crop one of the smallest in the past five years while, at the same time, very little of the fall seeded cereals will be downgraded to feed.

Sask Pork policy analyst Mark Ferguson notes feed is the single highest cost of producing pork.

"Over the past few years feed costs have made up around 50 to 60 percent of the total cost of producing hogs so any feed price increase is going to have a substantial impact on the bottom line for pork producers on the prairies.

Most producers who purchase feedgrains have supply agreements with local farmers to ensure they have an adequate supply of feed and, if producers have the opportunity to extend these supply agreements forward at current prices, it's probably a wise decision.

The other thing producers can do is use the Winnipeg Commodity Exchange and lock in delivery contracts for feed wheat and barley and you can do this up to one year in advance.

Both barley and feed wheat futures have been steadily increasing over the summer. October 2006 barley contracts are trading around 130 dollars a tonne while the July 2007 contracts are trading around 150 dollars a tonne.

Until May you could have locked in that July 2007 contract at 135 to 140 dollars a tonne so the future contracts up to a year in advance have increased by about ten dollars a tonne."

Ferguson suggests, if the supply of lower quality wheat and the total supply of barley are down in the fall, it is likely that feed costs will increase on the prairies and it's just a question of how much and when.

For Farmscape.Ca, I'm Bruce Cochrane.

5m Editor