December 13, 2007

 

Rising US meat production hurting Canadian hog farmers

 

 

US slaughter numbers have heavily influenced Canadian hog production, prices and profits and would continue to do so in 2008, according to the Saskatchewan Ministry of Agriculture.

 

Canadian hog prices, which has long been declining, may have finally bottomed out and have started to rise, the ministry said. However, the situation depends on what is going to happen in the US.

 

Live hog prices started to rebound at the beginning of the month and are now averaging between 95 and 100 dollars per 100 kilogrammes

 

However, this is still well below the long term average of about US$140 per 100 kilogrammes.

 

US hog slaughter numbers, US meat in cold storage and the Canadian dollar continue to heavily influence Canadian hog prices, Saskatchewan Ministry of Agriculture livestock economist Brad Marceniuk said.

 

Rising meat production in the US meant losses in Canada.

 

In Canada, slaughter numbers have actually been reduced due to reduced slaughter capacity.

 

This contrasts sharply with the situation in the US, which actually had record hog slaughter numbers in the fourth quarter.

 

US fourth quarter slaughter numbers were 8 percent over 2006 numbers, meaning more meat in cold storage while consumption remains flat, thus putting pressure on meat prices.

 

Continued strength in the Canadian dollar, which appreciated 20 percent this year, has also hurt the prices Canadian hog farmers got from selling hogs to the US.

 

However, Marceniuk said that based on lean hog futures, western Canadian index 100 hog prices should average between 100 and 110 dollars per 100 kilogrammes for the first quarter of 2008 and should increase to about 125 to 135 dollars per 100 kilogrammes for the second quarter of 2008.