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Increasing Feed Costs Lead to Losses for Hog Produces

by 5m Editor
13 December 2006, at 11:06am

CANADA - Farm-Scape: Episode 2263. 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 2263

Saskatchewan Agriculture and Food reports escalating feed costs are pushing most pork producers below break even.

Since mid-November hog prices have rebounded and are holding relatively flat, in the 122 to 132 dollars per 100 kilograms range, and prices are expected to remain flat during the first quarter of 2007 before increasing in the second.

Saskatchewan Agriculture and Food livestock economist Brad Marceniuk says several factors are influencing the markets right now.

"Looking at some of the positive factors, weekly US hog slaughter increases have started to actually fall from September and early October.

Also the Canadian dollar has had some weakness since September which is positive for Canadian hog producers and for our Canadian pork exporters.

Looking at the negative factors, US pork stocks in cold storage have started to rise since the end of August of 2006 and also the US demand for pork at the consumer level for the first ten months of 2006, which is January to October was down from the same period in 2005.

Looking at production costs, since the summer of 2006 we have seen a rapid increase in feed prices.

While feed prices will vary with location and will depend on the market size, we've estimated that for the mid-point feed costs have increased by 12 to 15 dollars per hog.

This has pushed production costs for index 100 hogs into the 140's. With current hog prices the way they are, in the mid 120's to upper 120's, producers are losing money on every hog they sell."

Marceniuk expect prices to be relatively flat into the first quarter of 2007, with Saskatchewan index 100 hogs averaging about 125 to 130 dollars per 100 kilograms before increasing into the second quarter and averaging in the range of 140 to 145 dollars per 100 kilograms.

Staff Farmscape.Ca

5m Editor