US hog prices to improve, currency will bog Canadian hogs

US hog prices are expected to show some improvement over the next year, but that strength won't be felt in Canada, where foreign exchange rates will continue to hamper the industry.

Steve Dziver, of Phoenix Agri-Tec Inc., said Canadian hog prices are directly linked to the US market, with the currency exchange rate between the two countries the largest factor in determining Canadian values.

US hog prices would be profitable in 2010, but on the Canadian side any profitability will require better risk management and a strategy to deal with the strong Canadian dollar, he said in a presentation during the Canadian Wheat Board's annual Grain World conference. He noted that given the current state of the industry, it was hard for Canadian hog producers to be profitable with a Canadian dollar above 90 US cents, as is currently the case.

Some of the expected increase in US prices in 2010 will be tied to the Canadian situation, where producers have been steadily reducing the size of the sow herd. Dziver said the smaller Canadian hog production, together with US country of origin labelling regulations, will mean that fewer Canadian hogs will be making their way to the US. The reduced Canadian numbers should be felt by the US industry, improving values, he said.