Canadian economist sees drastic price increase in live hogs

Canadian economist from the University of Guelph, Ken McEwan is predicting a dramatic price increase in live hogs this spring and summer.

Manitoba Pork Marketing Cooperative chief executive officer Perry Mohr said hog prices could increase by US$20 to US$40 per 100 kilogrammes compared to current prices and they might even be up by US$50 per 100 kilogrammes.

Factors contributing the price increase are reduced hog supply in the US, a decrease in the Canadian dollar, and lower feed prices.

McEwan said traditionally there is a seasonal price rally that peaks in June or July, which is expected to happen this year too but he is more cautious than Mohr in his opinion of where prices will go.

Another factor that may affect prices is an excess of animal protein currently in the US market, and many US hog packers have said they would not take Canadian pigs because of the US country of origin labelling (COOL) laws.

McEwan adding that seasonal peaks would be seen but would not be above average peaks. The average peak from 2003 to 2007 was US$160 per 100 kilogrammes.

According to him, futures market now has August hogs at US$174 per 100 kilogrammes. May's futures market price is US$157, while for June, it is around US$160 and by December it would crash down to US$130. Those futures market prices are way above current prices.

For the week ending April 17, the Ontario pool price was US$134 per 100 kilogrammes and the contract price was US$125 per 100 kilogrammes.