October 6, 2008

The Saskatchewan Pork Development Board is encouraging hog producers to keep a close watch on grain production estimates as they secure feed supplies for the winter months.

With feed making up roughly 65 percent of the cost of raising a hog, swine producers are encouraged to keep on top of the Agriculture Canada and US Department of Agriculture supply estimates and follow those closely as they secure supplies.

Sask Pork policy analyst Mark Ferguson says indications are that there will be a great crop in Canada with supplies of wheat and feed peas expected to increase, supplies of barley expected to be constant and prices expected to decline as well. There has also been a significant decline in feed grain costs over the past month.

The Canadian Wheat Board feed barley pool return outlook released last week indicates that barley FOB Saskatchewan is going to be priced at about CAN 3.30 a bushel and feed wheat is going to be about CAN 3.92 after freight.

This is a far cry from the prices last year.

The decline in prices should mean about a US$15 to 20 savings per hog on the production cost side which could prove the difference between profits and losses.

Unfortunately, even with lower feed prices, hog farms would continue to operate with negative margins and what is needed is higher meat and higher hog prices in the long term, Ferguson said.

While producers can lock in lower prices by forward contracting for barley and wheat, some may not be able to take full advantage of the lower prices because they may already have locked in prices at higher levels.