February 18, 2011

 

Canadian hog stocks ascend, cattle herd lowers

 

 

As of January 1, Canada's hog supplies moved higher on-year for the first time in nearly five years, while its cattle herd fell to the lowest January level in 16 years, Statistics Canada (StatsCan) said on Thursday (Feb 17).

 

Reductions in numbers of beef cows and sows, however, represent diminished potential to expand herds and suggest significant growth may not be imminent.

 

Hog producers had 11.9 million hogs to start the year, up 0.6% from a year earlier and the first on-year increase since April, 2006. Numbers of sows and gilts slipped 1% to 1.3 million head, with sows at the lowest level in 12 years.

 

"The thing that matters most is the sow herd and the fact that's down is reflective of the federal government (incentives to cease hog production) and the difficult economic circumstances, especially at the end of the year," said Kevin Grier, senior market analyst at the George Morris Centre, an independent Canadian agriculture research organisation.

 

"That's just a continuation of the downturn."

 

Soaring prices of feed grains have dampened optimism, as grain prices look to have more upside than also high Chicago hog and cattle futures, Grier said.

 

Canadian ranchers had nearly 12.5 million cattle on January 1, down 3.4% from a year earlier, continuing a six-year decline caused by strong currency, high feed costs and trade barriers.

 

The beef cow inventory slipped by nearly 3%, more than offsetting an increase in numbers of beef replacement heifers.

 

Strong export and domestic demand for cows has pulled down cow supplies, but some ranchers likely made profits in 2010 that may explain the build-up of beef heifers. The year 2010 started out pretty bad, with drought in Alberta, but finished the year with a note of optimism. "Cattle and hog herds in the US have also shrunk, but seem more likely to expand because of the additional pressure Canadian farmers face from a strong Canadian dollar," Grier said.

 

Tighter supplies are already a concern to Canadian pork packers, he said. Top hog processors are Maple Leaf Foods and Olymel LP.

 

Canadian cattle exports rose in 2010 nearly 5% to about 1.1 million head, but hog exports slipped 10% to 5.7 million hogs.

 

StatsCan's report on January herd levels is based on a survey of 10,260 livestock operations.