The Vice-President Pork Analysis with EMI Analytics says a low Canadian dollar means higher exports of Canadian pigs to the U.S. The value of the Canadian dollar has topped 77 cents compared to the U.S. dollar amid recent strengthening.
Dr. Steve Meyer, the Vice-President Pork Analysis with EMI Analytics, says when the Canadian dollar is low, it benefits Canadian producers.
Your prices are predicated on ours so it really doesn’t matter whether a Canadian producer is exporting a hog to the United States or just selling a hog in Canada they kind of win on that deal because there’re generating more Canadian dollars when they sell a hog up there because our price converts by the exchange rate.
It’s a profitable thing because only about half of Canadian’s costs get hurt by a stronger U.S. dollar and all of Canadian’s revenues get helped by a stronger U.S. dollar so it’s stimulative for the Canadian industry.
I really hope we don’t keep this relationship we have now. I’ve always though a 90 to 92 cent dollar would be much better longer term because it kind of creates imbalances here. The last time the Canadian dollar was even close to this weak we saw a big expansion of the Canadian business. That was part of what drove all of the decisions around Country of Origin Labelling and all of those kinds of things and we don’t need to repeat that.
With that being said, this is an integrated market and I’m glad that Country of origin Labelling is gone because it should be gone. If Canadians raise a few more weaned pigs and being them south for feeding and slaughter in the U.S. I don’t think that’s a bad thing. ~ Dr. Steve Meyer – EMI Analytics
Dr. Meyer says the low Canadian dollar means the Canadian packing industry will have to compete harder to keep hogs in Canada and that will be true of the cattle business as well.
He says more animals will flow south which will hurt them from a capacity utilization standpoint.
