ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

Canada Hog Markets

by 5m Editor
1 August 2012, at 1:20pm

CANADA - Ontario – Summertime… and the livings not so easy, writes Bob Fraser, Sales and Service at Genesus Ontario.

Crops

At least not if you toil in barns or fields. Perhaps if you’re at the beach or a cabin the seemingly endless summer feels like a boon but for those in agriculture the deepening drought with its continuous news cycle now reaching the mainstream media can become increasingly disconcerting and discouraging. However here in our small batch (Ontario) we’re in reasonable shape. With apologies to those that haven’t caught the rains crops look relatively good. Blessed as we are surrounded by the Great Lakes we’re not particularly familiar with widespread crop failure. We certainly have years better than another but we tend to always get rain. Not always enough and the nature of thunderstorms in the summertime it can rain on one side of the road and not the other. Therefore some areas are in better shape than others but virtually everyone will have a crop with opportunity for many to have quite a good crop.

Genesus Global Market Report
Prices for the week of July 22, 2012
Country Domestic price
(own currency)
US dollars
(Liveweight a lb)
USA (Iowa-Minnesota) 94.57¢ USD/lb carcass 69.98¢
Canada (Ontario) 1.75¢ CAD/kg carcass 63.70¢
Mexico (DF) 23.48 MXN/kg liveweight 80.44¢
Brazil (South Region) 2.15 BRL/kg liveweight 47.64¢
Russia 95 RUB/kg liveweight $1.34
China 13.24 RMB/kg liveweight 94.37¢
Spain 1.38 EUR/kg liveweight 77.04¢

The general rotation in Ontario is corn, soybeans and/or edible beans to winter wheat. My unscientific canvas of customers with winter wheat would deem the crop as average to better than average with yields suggested from 75 bus to 113 bus. Seeming to average around 100 bus. Which by most measures would be considered a good crop in Ontario. As well the crop appears to have been dry and toxin free. So the first round of the harvest cycle has been encouraging as well as 3 to 4 weeks early encouraging some to take a shot on double cropping soybeans. This doesn’t have a great track record of success here but “hope springs eternal“. So the beans and corn for the most part skates along the edge of stress, looking for rain but catching some, looks to be opportunity for reasonable crops here.

Hogs

If we take a look at the OMAFRA Weekly Hog Market Facts compiled by John Bancroft, Market Strategies Program Lead, Stratford OMAFRA [email protected] it’s difficult not to think of the opening line of Dickens – Tale of Two Cities “it was the best of times it was the worst of times“. John’s estimated margin after feeder pig and feed for the last five weeks is considerably better than we’ve seen for a very long time. However a review of the Ontario Feed Market below shows lots of trouble with corn and SBM with a trajectory that would do Cape Canaveral proud!

The Ontario Market 22-Jun-12 29-Jun-12 6-Jul-12 13-Jul-12 20-Jul-12
Average price ($/ckg, DW total value) $202.79 $214.73 $211.69 $209.71
Low price ($/ckg, DW total value) $175.34 $183.71 $190.65 $186.27
High price ($/ckg, DW total value) $222.49 $234.23 $233.56 $228.52
Weekly Average Dressed Weight (kg) 96.46 96.61 96.42 $96.20
Market Hogs Sold 82,399 82,931 75,753 85,175
Market Hogs Sold - % of Previous Year 106% 115% 92% 99%
100% Formula Price ($/ckg, 100 index) $184.02 $190.80 $185.80 $183.89 $175.57
Previous Year - 100% Formula Price ($/ckg, 100 index) $174.16 $180.50 $173.95 $166.72 $164.90
Weaned Pig Value (C$/pig) - Formula Value $47.85 $49.61 $48.31 $47.81 $45.65
Feeder Pig Value (C$/pig) - Formula Value $75.91 $78.71 $76.64 $75.85 $72.42
Est. Grow Finish Feed Cost for Current Week $88.41 $92.80 $99.14 $102.26 $109.75
Est. Margin after Feeder Pig and Feed $43.58 $50.45 $44.30 $43.70 $34.69


The Ontario Feed Market
(Friday's Closing Prices)
22-Jun-12 29-Jun-12 6-Jul-12 13-Jul-12 20-Jul-12
Chicago Corn (US $/bushel) - Sept'12 $5.9025 $6.2850 $6.9525 $7.4050 $8.2450
Chicago Soybeans (US $/bushel) - Aug'12 $14.4150 $14.8175 $15.6725 $15.9475 $17.5750
Soybean Meal ($/tonneHamilton + $20) $535.56 $543.61 $581.09 $609.31 $677.54
Old Crop Corn ( farm price - $/tonne) based on Sept'12 $230.40 $255.30 $277.64 $287.59 $320.65
Western Ontario feed Corn ($/tonne) - based on Sept'12 $242.61 $275.38 $298.90 $302.94 $336.80
New Crop Corn ( farm price - $/tonne) based on Dec'12 $192.51 $216.43 $235.42 $254.02 $281.78
DDGS FOB Chatham/Sarnia/Almer ($/tonne) $222.50 $217.50 $222.50 $235.00 $257.50

Prospects

This trajectory results as shown by John’s excellent work on margins being slashed from the present $37 to $15 and appearing to be on its way even further south.

The Hog Margin Tracker for 20 July 2012

  • Pigs marketed this week showed a realized margin of $37 per hog based on a market hog value of $190, a feeder pig cost of $62 (placed on feed April 6th), and a feed cost of $91 per pig. The expected margin when the pigs went on feed in April was $27. The difference is the higher realized market hog price this week.

  • The pigs that went on feed this week (20 July) are to be marketed the week ending 2 November show an expected margin of $15 per pig. This is based on a formula feeder pig purchase value of $29, an estimated feed cost of $108 per pig and an estimated market hog value of $152. The estimated feed costs and market hog value are based on the basis adjusted closing futures for lean hogs, corn, soybean meal and the Canadian dollar for Thursday, 19 July.

Once again highlighting the need for astute risk management in its many forms be it having a land base, judicious buying & selling to protect margin, to adaptation of the latest technology to ensure maximum productivity.

Finally for interest how exports of live pigs to the US have changed in the latest six months. The North Dakota port of entry would represent Western Canada pigs primarily Manitoba. The Michigan & New York port of entry represents Eastern Canada pigs primarily Ontario.

Summary of US Pig Import Numbers
Port of Entry Feeder Pigs Market Hogs Sows & Boars
Total for Canada
% Change from 2011 2% -23% -3%
Avg. Head/Week 2012 92,680 8,060 8,634
Change/week from 2011 1,728 -2,403 -260
North Dakota
% Change from 2011 6% -30% -1%
Avg. Head/Week 2012 77,483 1,915 5,100
Change/week from 2011 4,312 -840 70
Michigan & New York
% Change from 2011 -5% -36% -9%
Avg. Head/Week 2012 15,008 3,024 3,514
Change/week from 2011 -816 -1,692 -350

The % shown is the percentage change in 2012 versus 2011 as of 30 June 2012

The Avg. Head/week is for 2012 based on 26 weeks

Change /Week is the average difference in the number of pigs per week from 2011

Data Source: Canadian Live Animal Imports by State of Entry (USDA WA_LS635)