Improved Hog Outlook Expected by Mid-2009

CANADA - Informa Economics says dramatic cuts in North American hog production combined with lower feed prices are improving the outlook for western Canadian pork producers, writes Bruce Cochrane.
calendar icon 28 November 2008
clock icon 3 minute read

Low hog prices, high feed costs and the negative impact of a high value Canadian dollar have pressured Canadian pork producers.

Negative margins over the past 18 months in Saskatchewan have ranged from an estimated break even to 50 dollars per head resulting in about 100 million dollars in losses within the Saskatchewan swine industry.

Informa Economics vice president Dave Reimann says the middle half of 2009 looks much more promising.

Dave Reimann-Informa Economics

Assuming that the global economy doesn't go into a total free fall, I think that we should see a little more stability simply because the industry has done some pretty serious contracting here in the last 12 months and continues to do so.

It usually takes at least six to nine months for any of those sorts of moves to start to show up in markets so the middle of next year does look a little more promising.

Again, because of the more severe cutbacks on the Canadian production side, we hope that actually the recovery will be a little more dramatic here.

Going all the way to BSE on the cattle side, I think so far, Canadians over the last few years seem to be reacting faster.

I think ultimately that is a good thing because, in the long run, if we go on the faith that the economies in China, India and such, are still on a growth phase, there is some light at the end of this tunnel and regardless of how ugly things get here in the short term, looking forward down the road a couple years there is some reason to be optimistic.

If that's the case and we've repaired our situation here in Canada a little bit better I do think at least we're able to take advantage of it somewhat quicker.

Reimann suggests, long term, western Canada is in good shape because of the diversity of its feed grain supplies.

He notes high prices have prompted grain and oilseed producers to dramatically increase their production and that is resulting in lower feed costs.

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