Tight Supplies, Strong Demand Restore Profitability

CANADA - The Saskatchewan Ministry of Agriculture reports tight live hog supplies and strong demand for pork have helped return most of the province's pork producers to profitability, accordng to Bruce Cochrane.
calendar icon 13 September 2010
clock icon 3 minute read

The Saskatchewan Ministry of Agriculture released its monthly Hog Market Update last week.

The average weekly Iowa hog price for August averaged between 78.08 and 82.29 US per hundredweight while the signature-3 weekly cash price ending 27 August averaged 156.29 per 100 kilograms.

Livestock market analyst Godwin Pon says factors influencing hog prices are the continuing tight supplies of hogs which have forced processors to bid more aggressively for animals and stronger pork demand which has reduced pork stocks in cold storage.

Godwin Pon-Saskatchewan Ministry of Agriculture

Pork demand has been pretty strong domestically and export markets have rallied back, not to record levels, but are still stronger than they were in 2009.

This is primarily due to the continued tight supply of hogs affecting reduced slaughter numbers.

Stocks of cold storage have continued to fall from the month of July.

On 30 July supplies of pork in cold storage were at their lowest level since 2004 and inventory levels further declined from the month of June.

Cut-out values which is one way of estimating meat value of the carcass have hit record highs over the past couple of weeks finishing the week of September 4'th averaging about 91.78 per hundredweight.

What we're seeing is improvements in prices over last year.

For example loins and bellies ended the week of 4 September averaging 97.62 and 147.41 US dollars per hundredweight whereas the same values averaged about 64.93 and 61.22 US dollars per hundredweight.

Mr Pon notes every pork producers' cost structure is different.

However, he says, at current prices profitability has improved and he expects most producers to be at least breaking even if not making a small profit.

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