Live Hog Prices On the Rise

CANADA - The Saskatchewan Ministry of Agriculture reports live hog prices appear to have bottomed out and have started to rise, writes Bruce Cochrane.
calendar icon 12 December 2007
clock icon 3 minute read

Live hog prices started to rebound at the beginning of the month and, as of yesterday, were averaging between 95 and 100 dollars per 100 kilograms still well below the long term average of about 140 dollars per 100 kilograms.

Saskatchewan Ministry of Agriculture livestock economist Brad Marceniuk says key factors influencing western Canadian hog prices continue to be U.S. hog slaughter numbers, U.S. meat in cold storage and the Canadian dollar.

Brad Marceniuk-Saskatchewan Ministry of Agriculture

In Canada slaughter numbers have actually been reduced from 2006 because of reduced slaughter capacity here in 2007 but in the United States there have been actually record hog slaughter numbers in the fourth quarter.

Slaughter numbers are actually eight percent over 2006 numbers so far for the fourth quarter and that's really contributed to increased U.S. meat in cold storage so that increase in the stocks, while consumption has been relatively constant, it has put pressure on meat prices in general.

With the Canadian dollar, with Canadian hog prices derived from U.S. hog prices less a basis and adjusted for the Canadian exchange rate, the rapid rise in the Canadian dollar in 2007 has been very negative on Canadian hog prices.

From January to December western Canadian hog producers lost between 20 and 25 bucks a hog just directly because the Canadian dollar appreciated by over 20 percent.

Now Canadian hog prices should trend upwards here depending on U.S. hog slaughter numbers and where the Canadian dollar does go but, based on lean hog futures, western Canadian index 100 hog prices should average between 100 and 110 dollars per 100 kilograms for the first quarter of 2008 and should increase to about 125 to 135 dollars per 100 kilograms for the second quarter of 2008.

Marceniuk says U.S. slaughter numbers, the demand for pork and the Canadian dollar will continue be very important for Canadian hog producers in 2008.

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