A U.S. based agricultural economist predicts reduced North American pork production and lower input costs will result in improved hog prices in 2009.
The combination of an over supply of hogs, high input costs, and a strong Canadian dollar resulted in substantial losses for Canadian hog producers during 2008.
Dr. Ron Plain, an agricultural economics professor with the University of Missouri-Columbia, told those on hand last week for the Banff Pork Seminar, reduced slaughter numbers and lower feed costs should result in improvement in 2009.
If you look at 2008 hog prices really didn’t do too badly.
We were about two dollars above the long term average last year.
The problem was cost of production.
It was 14 dollars above the long term average.
Feed has been very expensive on both sides of the border and, because of the bio-fuels industry, we’ve been using so much corn to make ethanol recently it’s left a short supply for the livestock industry.
Our expectation is that, because of the weak economy, exports of corn out of the United States is projected to be down in the current year.
The livestock industry is cutting back so that feed demand for corn is down so we’re looking at fairly moderate prices relative to last summer’s peak.
Still four dollars corn doesn’t really sound very cheap but it’s lower than last summer.
Our expectation is that prices are likely to stay somewhere in the four to 4.50 dollar per bushel in the United States in the coming year.
I think is where we’re likely to average and I assume probably something like that for Canadian corn.
Dr. Plain forecasts losses in the first and fourth quarters of 2009 and profits in the second and third quarters.
He says we can feel fairly confident in a tightening supply of hogs as producers on both sides of the border reduce production but he acknowledges there is a lot of uncertainty around global demand for pork as a result of the recession.
Source: Farmscape.Ca
