June 18, 2007

Strengthening Canadian dollar hurting swine industry

The Saskatchewan Agriculture and Food foresees tighter margins in western Canada's pork industry as the value of the Canadian dollar continues to soar, reaching 94 the US cent mark in the past two weeks, the highest within 30 years.

Saskatchewan Agriculture and Food livestock economist Brad Marceniuk says overall US hog prices have seen little change over the last month or two but because of the strength of the Canadian dollar against the US dollar, there will be a notable drop in Canadian prices relative to US prices. 

As Canadian hog prices are based from US hog prices adjusted for the exchange rate, a strengthening Canadian dollar has a direct negative effect on Canadian hog prices, says Marceniuk.

Without including any market changes, the direct loss in Canadian dollars in revenues over the last two months is estimated to be about 12 to 14 dollars per 100 kilograms which is equivalent to about 11 to 13 dollars per slaughter weight hog. 

On the other hand, feed costs over the last month or two have been relatively stable.

Marceniuk notes increased corn acreage numbers this spring have tamed prices to some extent however, a large increase in feed prices in Canada and the US have been seen yearly and this could further pressure production costs on swine farmers.