The director of risk management with h@ms Marketing Services is projecting sustained profitability within the Canadian hog industry for at least the next year.
A combination of factors has dramatically improved the profitability picture for Canadian pork producers.
Tyler Fulton, the director of risk management with h@ms Marketing Services, observes cash hog prices have performed well bringing in new highs for summertime pork prices and those prices have been sustained longer than anticipated due to a combination of what appears to be good solid demand, no significant difference on the supply side, significantly lower feed ingredient costs and the weaker Canadian dollar relative to the U.S. dollar has also helped out for the last several months.
We’ve still got a long ways before harvest is complete but going forward I think it’s entirely likely we could be looking at positive hog profitability right through to the end of the year and well into next year, really as far out as we’re projecting and that profitability usually is the driver to expand in the industry.
Quite simply profitability breeds expansion and with expansion comes a downturn in price.
I think we’re not likely to see a significant expansion in the hog industry across North America within the next 10 to 12 months but if we do see this sustained level of significant improvement in profitability that’s the risk going forward.
Fulton suggests we’re trading at a new level so there’s not a great deal of downside risk.
He’s confident, despite projections for a two percent increase in hog numbers by this time next year, we can maintain good profitability a year a year beyond that at least.
