CME: Pork Markets Still a Topic of Interest
US - Following up on Friday's discussion about sow prices reported by USDA, it was pointed out to us that the quoted USDA sow prices reflect the price of sows slaughtered the day prior, reports Steve Meyer and Len Steiner.Those sows were naturally bought earlier than their
slaughter date and, as a result, do not reflect actual sow prices for that specific day. In addition, one should point out that there
are two separate USDA reports that cover the sow market. One of them is a mandatory report and the other is a voluntary report.
The prices quoted in the Friday issue were from the voluntary report, not the mandatory report. You can see the actual
USDA numbers for mandatory sow report and voluntary sow report.
Pork markets remain a topic of interest and it was interesting to see on Friday an announcement by the Canadian government
that it was stepping in to support their struggling hog producers. The Canadian hog industry has been in a contraction mode
since 2005 but the contraction has accelerated in the last two years following sharply higher feed costs, lower hog prices as well
as the implementation of the Country of Origin Labeling Law in the US, which distorted demand for Canadian born feeder pigs.
The most recent Canadian government support
program envisions a CAD$75 million fund
(~US$68 million), which will provide support to
producers that wish to stop or suspend production
for at least three years. The program also
would create a CAD$17 million fund to support
global marketing efforts to promote Canadian
pork. Furthermore, and likely just as important,
there is a provision that would allow banks
to provide “long-term loans with governmentbacked
credit.“ This is important since many
Canadian hog producers are finding it difficult
to secure credit in the current environment.
According to the news release "The Government
of Canada will share the loan loss risk. Lending
organizations will be required to ensure that the
borrower has a credible business plan..."
Clearly the Canadian government wants to prevent
a complete collapse of this once fast growing
industry, a collapse that would have significant
social and economic consequences for many
farming communities.
