Reduced Hog Inventories May Raise Prices

by 5m Editor
19 February 2009, at 11:31am

CANADA - The Saskatchewan Ministry of Agriculture is projecting a return to profitability in the western Canadian swine industry by the second quarter of this year, writes Bruce Cochrane.

Figures released by Statistics Canada show that, as of 1 January 2009, the number of hogs and pigs on Canadian farms was down by about ten percent from one year earlier while the breeding herd was reduced by about seven percent.

Brad Marceniuk, a livestock economist with the Saskatchewan Ministry of Agriculture, expects western Canadian prices to reach 155 to 165 dollars per one hundred kilograms in the second quarter, which would represent a return top profitability.

Brad Marceniuk-Saskatchewan Ministry of Agriculture

The Canadian hog herd has declined by about one tenth in size in 2008 so hog production will decline in 2009.

Canadian farrowing intentions for the first half of 2009 are estimated to be down about three percent compared to the same period in 2008 so we'll continue to see Canadian hog marketing numbers decline into 2009.

With less hogs produced we expect less live hog exports into the US in 2009 from 2008 and this should really help the US hog supply numbers a little bit be reduced and be positive for hog prices.

With losses among both Canadian and US producers in the last year, producers are exiting the industry so we're seeing reduced production.

The big question will be in 2009, where will demand be with the global recession at this time, what will demand for North American pork be?

In 2008 US pork exports soared by about 70 per cent so, if we see any major decline in North American pork exports in 2009 we could then see domestic supplies increase which could put pressure on North American hog prices.

Mr Marceniuk says, with reduced hog supplies, prices are expected to be higher in 2009 particularly for Canadian producers as a result of the decline in the value of the Canadian dollar.

He says, with lower production, hog slaughter capacity should not be an issue but demand for pork and North American pork exports will be key factors influencing prices in 2009.

Further Reading

- You can view the Canadian Hog Statistics (Fourth Quarter 2008) report by clicking here.