October 3, 2008

The year-to-date total for live hog and pig imports from Canada should slide below the year-ago figure by mid-October, a result of declining shipments south since late April.

Record high feed costs earlier in the year, an unfavourable exchange rate and hefty losses for Canadian hog producers have caused the Canadian pork industry to trim its breeding herd and ship fewer animals to the US.

Last year, the US imported just over 10 million hogs and pigs from Canada. The majority were feeder pigs which are then placed in finishing barns and fed to slaughter weight. The animals of Canadian origin amounted to about 9.3 percent of US hog slaughter in 2007, according to the USDA.

Hog and pig imports during the first four months far outpaced those in the same period in 2007. According to USDA weekly livestock import data, about 610,000 more Canadian hogs and pigs were shipped into the US in January-April compared with a year ago. That was an increase of 20 percent.

After Canadian hog producers suffered severe financial losses during the winter and with grain prices expected to remain high, the Canadian government offered producers a buyout programme aimed at reducing the breeding herd by 10 percent. That programme began this spring and as sows were taken out of production, fewer pigs were available.

Since late April, weekly imports have fallen by an average of nearly 26,000 head from a year ago. According to the latest report, the year-to-date total as of September 27 was only about 46,700 head above a year ago.

If the trend set since late April continues through the end of the year, the annual figure for swine imports would be down by around 290,000 head from the record high set last year. Looking into the first quarter of 2009, the supply of Canadian hogs and pigs available to US finishers and pork processors should decline even further on a percentage basis, analysts said. This would be driven by fewer pigs and slaughter hogs arriving in the US compared with a period the previous year when shipments were still on the rise.

Analysts said with fewer Canadian hogs available for processing, packers will be forced to be more competitive for the remaining supplies. That would be supportive for prices.