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Prolonged Hog Industry Profitability Expected

by 5m Editor
21 August 2013, at 7:13am

CANADA - The director of risk management with [email protected] Marketing Services is confident lower feed costs will result in improved profitability within the Canadian pork industry well into 2014, writes Bruce Cochrane.

A combination of factors including a solid demand for pork, reduced feed ingredient costs and the weaker Canadian dollar relative to the US dollar have dramatically improved the profitability picture for Canadian pork producers.

Tyler Fulton, the director of risk management with [email protected] Marketing Services, says it's really a tale of two crop years.

Tyler [email protected] Marketing Services

Last year we dealt with extremely tight feed stocks across North America simply because of the US drought and that shot feed ingredient prices up to record levels or near record levels.

While we're still dealing with the fallout of that there really is a tangible optimism amongst producers for this crop year.

Whether we're talking western Canada or right across North America the crops look significantly better than they did last year and consequently feed ingredient prices are down significantly from last year and that is really the game changer from a profitability standpoint.

Going forward we've still got a long ways before harvest is complete but going forward I think it's entirely likely that we could be looking at positive hog profitability right through to the end of the year and well into next year, really as far out as we're projecting and that profitability usually is the driver to expand in the industry.

Mr Fulton acknowledges profitability breeds expansion and with expansion comes a downturn in price.

However he doubts we'll see a significant expansion in the North American hog industry over the next to 12 months.