Profitable Hog Prices Projected in Second Quarter

CANADA - A livestock economist with the Saskatchewan Ministry of Agriculture predicts the majority of western Canadian pork producers will be back to break even levels by the second quarter of this year, writes Bruce Cochrane.
calendar icon 12 March 2010
clock icon 3 minute read

A combination of factors including an over supply of hogs, increased input costs particularly for feed, the fluctuating value of the Canadian dollar, US Mandatory Country of Origin Labelling (M-COOL) and the impact of the global recession on pork demand have contributed to three years of losses within the Canadian pork industry.

Brad Marceniuk, a livestock economist with the Saskatchewan Ministry of Agriculture, observes North American hog prices have been trending upward over the last few weeks primarily due to reduced production, lower volumes of meat primarily pork and poultry in cold storage and increased US pork exports.

Brad Marceniuk-Saskatchewan Ministry of Agriculture

Looking forward based on our current lean hog futures prices and the Canadian exchange rates futures I think western Canadian hog producers could average between 143 and 148 dollars per 100 kilograms in the second quarter of 2010 and average between about 138 to 143 dollars per 100 kilograms in the third quarter of 2010.

Based on these prices I think producers in western Canada or at least the majority of the producers should see some break even levels here in the second quarter of 2010.

I think the main factors to watch for producers is what's happening with the US hog slaughter numbers and what are we seeing with pork export demand.

Further reductions in hog slaughter numbers will help improve hog prices into the summer but I think a noticeable improvement in North American pork exports are really needed to see a large jump in prices as we roll into the summer.

One of the factors for Canadian producers will be where is the Canadian dollar going to be?

Any large fluctuations in the value of the Canadian dollar will alter prices for our Canadian producers.

Mr Marceniuk notes the rise in the value of the Canadian dollar over the past few weeks has limited prices increases for Canadian hogs.

He says if the dollar remains strong or if we see further strength in the second quarter of 2010 it may further limit price increases.

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