The main factors affecting hog prices in North America, and in Canada especially, are increased U.S. hog slaughter numbers, increased meat in U.S. cold storage, high feed costs and the rising value of the Canadian dollar.

Saskatchewan Agriculture and Food Livestock Economist Brad Marceniuk notes U.S. hog slaughter numbers have increased significantly over the past month, and they're expected to remain at record levels through the fourth quarter of 2007 and the first quarter of 2008 at a time when the rapid rise of the Canadian dollar has reduced hog prices in western Canadian by about 20 percent.

Brad Marceniuk-Saskatchewan Agriculture and Food

U.S. hog production is expected to continue to increase over the coming quarters.

U.S. hog slaughter numbers have increased significantly since the beginning of October with weekly U.S. slaughter numbers exceeding 2.3 million head per week.

Looking at U.S. slaughter numbers for the fourth quarter, they're expected to reach record levels of 29.2 million head in the U.S. and also into the first quarter of 2008 also record levels of about 27.65 million head.

In Canada we've seen a continued reduction in sow numbers which will translate into lower hog production over the year.

In western Canada we expect hog production to be relatively flat for the next one, maybe two quarters and then we expect it to decline.

Looking at current trends of the strong dollar and of high feed costs, if these trends continue we expect to see a significant reduction in the sow herd and a down sizing of the western Canadian hog industry.

Marceniuk adds the higher U.S. slaughter has translated into higher volumes of pork in U.S. cold storage which has reduced cutout values by probably 15 to 20 percent over the past month or two.

He says, with the stronger Canadian dollar and high feed costs, producers in western Canada don't expect to see profitability over the next 12 months.