Hog Market Profitability Projected Mid-2010

by 5m Editor
4 November 2009, at 11:58am

CANADA - Informa Economics is projecting a return to profitability in the hog industry toward the middle of 2010 gaining momentum toward the end of the year, writes Bruce Cochrane.

Canadian hog producers have faced prolonged losses as resulting from factors such as excess hog supply, increased input costs, the rising value of the Canadian dollar and the effects of US Country of Origin Labelling.

Informa Economics vice-president Dave Reimann says we've seen a little more stability over the last couple of months as producers have cut production but we've seen some recovery in feed prices which, in combination with the rising value of the Canadian dollar, has neutralized some of the recovery.

Dave Reimann-Informa Economics

We've constantly seen reduction in herd sizes and most of the statistics seem to bear out that people are cutting back on both sides of the border.

I think Canada has been at that in a much more serious tone for much longer than the American producers have.

The only problem with that is that it still seems that there is constantly more supply coming to market than the statistics would bear out.

I suppose that suggests that there is really more hogs on many of these farms than maybe the USDA or Stats-Can understands or knows about at this point.

However the truth is there's been a serious cull going on now for quite some time and is still ongoing.

This is where I think most of our analysts are expecting the sector to start to return to some profitability in the middle of next and into the last half because by that point we're expecting those hog numbers will be down long enough to have actually had some impact and start to really hit the meat supplies and maybe start to drive up prices from that sector.

Mr Reimann says the hog market is still under a lot of pressure and most analysts involved with the sector in his company are still looking for some recovery and some return to profitability but unfortunately it still doesn't look like there's much hope for that until at least the middle of next year and probably not gaining any really good momentum until late in 2010.