May 7, 2007

North American hog prices seen to increase this summer

Hog prices in North America have rebounded since the beginning of April as last week's SPI price for index 100 hogs ranged from 139 to 149 dollars per 100 kilogrammes.

Saskatchewan Agriculture and Food Livestock Economist Brad Marceniuk said although Canadian prices have lagged behind those of the US due to strong Canadian dollar, he expects prices will increase heading towards summer.

Marceniuk noted US hog slaughter numbers will also affect hog prices.

He said that while North American hog prices went down in March as US hog slaughter numbers averaged over two million head per week, the US hog slaughter over the last three weeks have declined below two million head per week which pushed up hog prices recently.

US meat cold storage stocks have also been an important factor, according to Marceniuk.

While overall US cold storage stocks of pork, beef and poultry at end March 2007 were up slightly from February, he said total meat in cold storage was actually down about 14 percent from a year ago which can be a positive indicator of hog prices going to spring or summer. The upbeat trend has already been evidenced by the in pork cutout values over the last week.

The economist also said US slaughter numbers and North American slaughter capacity will still be the key factors affecting prices this summer.

The closure of Maple Leaf plant in Saskatoon which redistributed slaughter hogs in the region still has an uncertain effect but Marceniuk said it would definitely impact hog prices in summer.

Marceniuk expects index 100 hogs to average between about 145 and 150 dollars per 100 kilograms for the remainder of the second quarter before falling slightly to about 140 to 145 dollars per 100 kilograms for the third quarter.