June 12, 2023

Canadian cattle prices to rise, swine market outlook weaker

Cattle prices for the year 2023 are expected to be higher compared to the previous year and surpass the five-year average in Canada, but the swine market outlook in the country has weakened, according to a report from Farm Credit Canada (FCC), The Pig Site reported.

The smaller North American cattle herd is contributing to beef production challenges, driving the price forecast upwards. FCC's outlook for the period has shown consistent increases since the February report.

The report highlights positive projections for cow-calf profits, with anticipated revenue growth and declining average costs on a yearly basis. Margins in 2023 are expected to exceed the five-year average, signalling a favourable outlook beyond the next three months.

This year may see feedlot margins approaching break-even levels, offering relief from previous profitability pressures. Additionally, lowered feed costs in the West will contribute to improved margins in that region.

The Canadian swine market outlook has weakened following the announcement of Olymel, a major pork processor in Canada, closing a hog plant in Vallee-Jonction, Quebec later this year. The FCC report notes a decline in Ontario market hogs from their 2022 peak, aligning them with the five-year average.

Feeder swine prices have also dropped in the eastern and western regions of the country. While Manitoba market-ready swine have experienced a year-on-year decline, they currently remain above the average level.

The closure of Olymel's Vallee Jonction plant is specifically identified as a significant development impacting Canada's eastern hog markets. The reduction in Quebec's swine herds is expected to reach 1 million, leading to a decrease in slaughter capacity and introducing new swine marketing agreements that could affect producer prices and profit-sharing options between processors and producers.

FCC analysts also anticipate ongoing challenges from feed costs. But current prices and the forecast for the year offer some relief for Canadian livestock producers.

-      The Pig Site