Changes to Canadian Hog Pricing Formulas Improve Producer Profitability

Changes in the way Canadian pork processors value the hogs they purchase have reduced volatility within the market and improved the profitability of producers. Canadian live hog prices have typically been based on formulas that reference U.S. prices but, right now, the total volume of hogs available in the U.S. is much closer to the maximum U.S. slaughter capacity than is the volume of hogs in Canada to Canadian capacity.

 

Tyler Fulton, the Director of Risk Management with HAMS Marketing Services observes we've seen a better than usual improvement in the pork cut-out value since the Christmas holiday period allowing the packers to rationalise higher prices and it has a more direct influence on some producer contracts.

 

 

Increasingly in Canada, in western Canada in particular, we've started to see more packers make reference to the pork cut-out, the carcass cut-out value. What that means is that it's generally a little less volatile and when demand is good and a lot of pork is moving from packers, the pork value can reflect that and the producer would be a direct benefactor of a higher pork cut-out.

 

For example the pork cut-out value currently is running the neighbourhood of around 85 dollars. What we're talking about is 85 U.S. dollars for the aggregate value of all of the primal cuts off of a U.S. pig where as live hog prices, in terms of cash bids, are still well shy of that, sub-70 dollars, so there's been an advantage to those producers that have been able to have their formula price based in part at least off of the pork cut-out.

Video: Evolution of Beef Cattle Farming

The Clear Conversations podcast took to the road for a special episode recorded in Nashville during CattleCon, bringing listeners straight into the heart of the cattle industry. Host Tracy Sellers welcomed rancher Steve Wooten of Beatty Canyon Ranch in Colorado for a wide-ranging discussion that blended family history and sustainability, particularly as it relates to the future of beef production.

Sustainability emerged as a central theme of the conversation, a word that Wooten acknowledges can mean very different things depending on who you ask. For him, sustainability starts with the soil. Healthy soil produces healthy grass, which supports efficient cattle capable of producing year after year with minimal external inputs. It’s an approach that equally considers vegetation, animal efficiency, and long-term profitability.

That philosophy aligned naturally with Wooten’s involvement in the U.S. Roundtable for Sustainable Beef, where he served as a representative for the Colorado Cattlemen’s Association. The roundtable brings together the entire beef supply chain—from producers to retailers—along with universities, NGOs, and allied industries. Its goal is not regulation, Wooten emphasized, but collaboration, shared learning, and continuous improvement.