Western Canadian Hog Prices Projected to Decline During Second Half of 2007

CANADA - Saskatchewan Agriculture and Food predicts feed costs, the value of the Canadian dollar and North American hog slaughter capacity and numbers will be among the key factors influencing western Canadian hog prices during the second half of 2007, writes Bruce Cochrane.
calendar icon 6 July 2007
clock icon 3 minute read

After rebounding toward the end of June, live hog prices have declined over the past week to falling to a range of 131 to 141 dollars per 100 kilograms for SPI index 100 hogs.

Livestock Economist Brad Marceniuk blames continued growth in U.S. production, despite higher corn prices, and increased Canadian hog exports into the U.S. and he expects the decline to continue into the third and fourth quarters.

Brad Marceniuk-Saskatchewan Agriculture and Food

Some of the main factors that will influence profitability for hog producers will continue to be feed prices, the Canadian dollar, North American slaughter capacity and slaughter numbers and the overall demand for pork.

Feed prices will be strongly dependent on the current crop year and whether production is higher and allows prices to fall.

The strong Canadian dollar, if the dollar continues to increase in strength relative to the U.S. dollar it will put further pressure on Canadian hog prices.

The third factor is North American slaughter capacity, particularly the United States slaughter capacity.

With increased production in the U.S. and increased exports of slaughter hogs from Canada to the U.S. we expect to see record high slaughter numbers in the fourth quarter of 2007 and that could be very negative for hog prices.

With current plant closures that we have seen in the last little, while with the Saskatoon plant, producers will be looking at finding markets in the U.S. unless there is some openings in expansion with either Red Deer or the Brandon plant so marketing will be very key into the third and fourth quarter of 2007.

Marceniuk predicts western Canadian live hog prices will fall to a range of 122 to 132 dollars per 100 kilograms for the third quarter of 2007 and further decline to about 112 to 122 dollars for the fourth quarter.

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