May 29, 2008

Higher meat prices in Canada levelled off by rising feed costs

Rising prices of corn, a main animal feed ingredient, have forced up the prices of beef and pork in Canada.

Cattle futures on the CBOT suggest live-fed cattle prices may increase by about 13 percent by the end of the year, as rising input costs force a cutback in production amid rising global meat demand.

However, Canadian farmers are not gaining from the meat price increase, as the appreciating currency and increasing fuel costs are eating into their products' value.

Current Canadian cattle prices are the worst in 30 years with many producers on the verge of leaving the industry as they are hardly making any money, according to Lianne Appleby, communications manager at the Ontario Cattleman's Association.

Corn prices have surged 25 percent since January due to demand from ethanol producers and overseas markets, peaking at US$6.39 on May 9.

Average price for fed steers in Canada was US$86.24 in the week ending May 22, up US$8.33 from January, but down US$21.34 on-year.

In addition, Canadian hog farmers find themselves in the same difficult situation due to market oversupply and strong Canadian dollar, the former of which had prompted the government to launch a US$50 million culling programme.