October 22, 2003

Prices of Canada Hog Weakens By Stronger Canadian Dollar

Manitoba Agriculture and Food's livestock market analyst estimates the increased value of the Canadian dollar is shaving 12% off the price of live Canadian hogs.

Provincial Market Analysis and Statistics Branch Manager Janet Honey says hog prices are better than one year ago, when a glut of US poultry caused by a Russian ban flooded the market, but they could have been much stronger.

She says the main factor that has impacted hog prices this year in Canada has been the stronger Canadian dollar.

"On average this year it looks as if the dollar will be 12% higher than last year but if you look at it on a week to week basis, in some weeks, it's been up as much as 20% from the same week a year ago.

Normally a dollar increase of about 12% would take place over a number of years. It wouldn't just happen within one year and that has been the problem because producers have not had time to adjust."

She continued to say that this isn't the largest increase or decrease in the Canadian dollar. Back in 1986, the dollar increased until 1991 and then the dollar dropped but, again, it was over a longer period of time.

The impact on hog prices obviously depends on what week you're looking at but on average this year the focus is on this drop of about 12% in prices compared to what they would have been if the dollar had been the same as last year.

Honey says the other key factor has been the large number of Canadian hogs moving into the United States.

She says Canadian packers have been slaughtering less hogs to cut down on losses prompting higher shipments south which has hurt prices there, in turn, reflecting back on Canadian prices.

She says, while hog prices are about 30% higher than one year ago; they could have been stronger if it weren't for the higher dollar and the increased exports south to US.