November 7, 2011

Hog inventories in Canada nudged up 0.9% to 11.990 million head as of October 1, slightly higher than last year's levels but remained the second smallest in more than a decade, according to Statistics Canada data released on Friday (Nov 4).

This was the first increase in October hog inventories on-year since October 2005 and the third consecutive quarter of growth, according to the government data.

After a long period of decline for the industry, farmers held onto more of their breeding stock, suggesting the industry may be stabilising, analysts said, adding that prices may be the main reason.

Chicago live hog futures are up about 9% so far in 2011, on track for their fourth straight year of growth.

The Canadian hog industry came under intense pressure in recent years from a strong Canadian dollar, higher feed costs and the US country-of-origin labelling law, leading Ottawa to offer incentives in 2009 for farmers to cease production.

This year, the estimated number of sows and gilts (female pigs that have not yet had litters) was flat from the previous year, at 1.29 million, ending a six-year decline.

During the third quarter of 2011, a total of 5.3 million hogs were sent to slaughter, up 2% from the same period in 2010. Canadian hog slaughter peaked in the fourth quarter of 2004 at just over six million head.

Hog exports in the third quarter this year totalled 1.4 million head, down 4.3% from the same quarter in 2010. Exports have declined for the past four years, and third-quarter exports were 42.6% below the peak for the period hit in 2007, the government agency said.

The strong Canadian dollar and weak US economy hampered exports, experts said.