2008 Predictions: Canadian Production Falls as US Production Rises

CANADA - Rabobank predicts the high value of the Canadian dollar and the impact of US Mandatory Country of Origin Labelling will prompt reductions in Canadian swine production over the next year while American production will continue to grow, writes Bruce Cochrane.
calendar icon 21 December 2007
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Rabobank unveiled North American Food and Agribusiness Outlook 2008 yesterday.

Executive director food and agribusiness research Fiona Boal says key factors affecting profitability in Canada and the U.S. have included continued record U.S. weekly slaughter numbers and high supplies of meat, while the value of the dollar has hurt Canadian producers and those same factors will influence markets in 2008.

Fiona Boal-Rabobank International

I think the US hog producer has had a number of very very profitable years.

It will take them some time in the red for them to seriously consider reducing their production so I do think that US hog production will probably increase slightly next year and that they will be able to take some of those losses maybe for longer than they would have in previous periods of low prices.

I think we can expect to see Canadian production fall again next year as the industry continues to work through its problems.

We'll see a further development of the isowean trade across the border as one way for Canadian producers to really adapt to their new environment of high feed costs and also a high dollar.

I think export markets are really going to continue to be what drives profitability for both Canadian and for US pork producers and the processors that they deal with.

Boal suggests key export markets to watch will include China, Mexico and Japan.

She expects Country of Origin Labelling to have a greater impact on Canadian producers than those in the US because the additional costs of segregating Canadian hogs are likely to be driven back to Canadian producers.

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