Higher Prices Push Producers Closer to Profitability

by 5m Editor
15 August 2008, at 2:46pm

CANADA - The Saskatchewan Ministry of Agriculture reports significant improvements in lives hog prices have moved western Canadian pork producers closer to profitability than they have been in the last year, writes Bruce Cochrane.

The Saskatchewan Ministry of Agriculture released its monthly Hog Market Update for August earlier this week.

Livestock economist Brad Marceniuk says a strong increase in North American hog prices combined with a very large drop in the value of the Canadian dollar, about six cents over the past three weeks, has pushed Canadian hog prices upward significantly and, for the first time in over a year, western Canadian hog producers are close to break even.

Brad Marceniuk-Saskatchewan Ministry of Agriculture

Hog prices have really improved significantly over the last three weeks with western Canadian hog prices increasing by about 25 to 30 dollars per 100 kilograms or over 20 percent.

Strong demand for North American pork plus a large drop in the value of the Canadian dollar versus the US dollar has significantly increased Canadian hog prices.

Current SPI index 100 hogs for August 14 is ranging from about 163 to 173 dollars per 100 kilograms.

We expect to see continued higher US weekly hog slaughter numbers in the fourth quarter to record levels which will put downward pressure on hog prices.

We expect hog prices will decline.

The factors to significantly look for will be where the Canadian dollar does go in the fourth quarter and where will the new crop of grain go for feed prices.

Weekly US hog slaughter numbers and global demand for North American pork will still be key factors to look for over the coming months, for the rest of '08.

Mr Marceniuk notes total meat in US cold storage has increased from May to June of this year and is also higher than year ago totals.

However, he says, while pork in US cold storage is still higher than year over year numbers, strong demand for North American pork has allowed pork stocks in storage to continue to decline since April which has been very positive for pork prices.

5m Editor