January 12, 2007

Weaker Canadian dollar lessens losses for Canadian hog producers

A lower Canadian dollar has taken some of the heat off price declines for live hogs, Saskatchewan Agriculture and Food Reports said.

Hog prices have been declining in recent weeks, the result of higher US slaughter numbers and higher volumes of red meat in cold storage.

Although North American hog prices have fallen since the beginning of December, Canadian prices have not fallen as much as US prices, thanks to the weakening Canadian dollar. 

Over the last eight weeks, slaughter numbers continue to be about 1.6 percent higher than over the same period a year ago, livestock economist Brad Marceniuk said

According to the USDA, the US breeding herd expanded by about 1.3 percent over the last year. This meant US hog production would probably increase by at least two percent in 2007, leading to higher slaughter numbers for 2007

However, higher corn prices in the US may reduce slaughter weights in 2007 and dampen the increase.

While US pork stocks at the end of November were down from October, they are up six percent on-year.

Still, the depreciation of the Canadian dollar has served as a silver lining, adding about four to five dollars per hog for Canadian hog producers, lessening the effect of falling prices.

The good news is that Canadian farmers may finally get to see profits soon. Although most producers continue to operate at below break even levels, prices are expected to improve in the first and second quarters of 2007, Marceniuk said.