May 19, 2008


Canada's pork price rise may be short-lived



Sow liquidation and reduced pork production appears to have staved off precipitious drops in Canadian hog prices, but whether these values will continue to move higher in 2008 remains to be seen, a Saskatchewan Ministry of Agriculture livestock analyst said.


Strong live hog demand have helped improve market prices in general and could continue to strongly influence prices in the months ahead, Brad Marceniuk, a livestock economist with the Livestock Development Branch of the Saskatchewan Ministry of Agriculture, said.


However, this could all come to a screeching halt with the implementation of COOL (Country Of Origin Labelling) by the US in October. Seasonal downtrends in pork values may also halt the rise in pork prices.


He noted that the daily price released by the Saskatchewan Pork Institute for hogs has climbed significantly. A few reasons for the optimism could be that values for hogs in the US were rising sharply amid the continued liquidation of the hog herds in the US and in Canada. Steady global demand has also helped support price increases, he said.


The SPI (Saskatchewan Pork Institute) Index 100 hog value on May 14 ranged from C$1.44 to $1.55 per kilogramme, compared to Chicken$1.26 per kg at the end of April.


Over in the US, strong pork demand from China has stimulated exports. As consumers in China increase their pork intake, Canada benefits indirectly. Canada's pork shipments to China are only a fraction of what the US ships to the same destination.


Still, Canada stands to benefit from rising US pork exports as the formula for calculating pork values are similar, he said.


Moreover, pork demand is going to rise as the holidays approach and more consumers partake in barbeques. 


However, prices are likely to retreat when COOL is implemented in the US in September, he warned.


There have been a number of US hog processors that have already indicated they will no longer import Canadian hogs because of the new laws, Marceniuk said.


However, Marceniuk said this could be a ploy by the US plants to reduce the value that they are paying for the Canadian hogs.


"It will be interesting to see if these US plants again resume purchases of Canadian hogs when prices have declined 10 percent to 20 percent," he said.

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