h@ms Marketing Services says improved hog prices over the past couple of months have helped generate renewed optimism within the Canadian pork industry.
In September, when feed costs had peaked as a direct result of the U.S. drought, hog prices were pretty much bottoming out creating a dismal situation.
Tyler Fulton, the Director of Risk Management, with h@ms Marketing Services, says we have since seen a counter seasonal rally in October and November and, although things are still pretty tough for market hog producers, we are seeing a little more optimism.
To experience a recovery in feed costs we need to see normal yields in the U.S. largely in the corn and soybean crops.
In order to get those normal yields we need to see precipitation that would exceed normal levels from now until spring, probably 40 to 50 percent across the mid-west.
I think people are generally optimistic and I think that there is some reason to believe that we’ll see more normal feed costs but it’s kind of a wait and see approach.
We’ve very much reliant on the weather to bring those feed costs down in the long term and that’s pretty much where the focus is.
On the hog side I think things look generally fairly optimistic.
Exports from the U.S. to other countries have exceeded expectations.
I think that maybe things might come under pressure as we move through the first quarter of next year but, overall supply is going to be relatively steady.
The combination of the market hog prices and the possibility of more normal feed costs moving into the spring would have hog producers return to profitability by early spring.
Fulton says without a doubt the number of possible outcomes on feed markets is really where the risk is for hog producers.
