Posted on 03/06/2009, 6:39 am, by mySteinbach

The Saskatchewan Ministry of Agriculture reports reduced North American hog production, lower feed costs and the declining value of the Canadian dollar could restore western Canadian hog producers to profitability by the second quarter of this year.

The Saskatchewan Ministry of Agriculture’s Hog Market Outlook for March, released earlier this week, indicates prices remained highly volatile last month fluctuating by about 15 percent.

Livestock economist Brad Marceniuk reports the key factors influencing prices have included fluctuating U.S. weekly hog slaughter numbers, higher levels of pork in U.S. cold storage and slightly reduced U.S. pork cut-out values.

In Canada weekly slaughter numbers over the last six weeks are down just over one percent from year ago levels.

I think if the value of the dollars remains low and global demand remains strong we should see some increases in Canadian slaughter numbers here in 2009 from 2008.

In the U.S. we’ve seen a 1.2 percent decline in U.S. slaughter numbers over the last eight weeks while we’ve actually seen a slight increase in slaughter numbers over the last four weeks compared to the same period a year ago.

Overall, I think pork production…we have not seen any significant changes here over the last few weeks compared to a year ago but looking forward with U.S. hog slaughter numbers projected to be down about three percent in the first quarter and six percent in the second quarter combined with reduced Canadian marketing numbers of about eight percent in the first half, I think we’ll see some material reduction in North American pork production by the second quarter of 2009.

This should mean better prices for North American producers.

Global demand for North American Pork will however be key for prices as North American prices have become more reliant on the export market.

Marceniuk notes the futures markets indicate hog prices could rebound by the second quarter of 2009 and, if feed costs remain at current levels, we could see a return to profitability by the second quarter.

He says, while North American production will be down in the second quarter, global demand for North American pork will be key in determining where hog prices go this summer.

Source: Farmscape.Ca