Increasing Corn Price Shifts Cost Advantage in Pork Production Back to Western Canada
CANADA - The Saskatchewan Pork Development Board reports the high demand for corn for ethanol in the U.S. has helped shift the feed cost advantage back to western Canada, at least temporarily, writes Bruce Cochrane.
26 February 2007
3 minute read
Usually U.S. pork producers rely on a standard corn ration while Canadian producers tend to feed a wheat and or barley based ration so, when comparing feed costs the main ingredients to consider are wheat, barley and corn.
Sask Pork policy analyst Mark Ferguson says a combination of productivity increases in corn, high U.S. corn subsidies and low demand for corn had shifted the feed cost advantage to the U.S. Midwest but the demand for corn is starting to catch up.
Mark Ferguson-Saskatchewan Pork Development Board
It certainly appears as though Saskatchewan is becoming a more competitive place to feed hogs and since September we've seen this change occur.
Corn and wheat basically were tracking one another in terms of price and since September the prices of the two commodities have started to diverge when you compare an Iowa corn price, local elevator price and a Saskatchewan wheat price.
The main factors influencing this is obviously the ethanol boom in the United States and the impact that it's having on the demand corn and now there appears to be about a 30 dollar to 40 dollar per tonne spread in the price.
I think what we're seeing is that, although we did have a reduced supply of feed wheat and barley this year due to a higher quality crop, since we don't have the same amount of demand for industrial use wheat and barley we're not seeing the same increase in price.
Ferguson says how long that will last is unknown but, for now, the cost advantage has shifted back to western Canada.
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