The director of risk management with h@ms Marketing Services says, despite the recent slide in live hog prices, Canadian pork producers can expect to remain profitable for at least the next 4 to 6 months.
Through August and the first week of September cash hog prices in Canada dropped by close to $50 per 100 kilograms.
Tyler Fulton, the director of risk management with h@ms Marketing Services, says we've seen some recovery since then but we're well below the highs experienced in early July and it all relates back to the U.S. supply situation and the impact PED losses experienced in March and April are having on slaughter levels today.
Tyler Fulton-h@ms Marketing Services:
Over the last several months the U.S. slaughter has been averaging about 6 percent fewer hogs than what we experienced last year and that's a pretty significant year over year change.
Now we've seen some weeks recently that have been dealing with a deficit of as many as 10 percent but some of that is being made up by larger carcass weights so fewer hog numbers being offset by carcass weights that are sometimes 4 and 5 percent larger which results in net pork production on a weekly basis running closer to a 3 to 4 percent deficit from last year and so really it just comes down to that.
A four percent drop in pork supply can realize changes of even 15 to as much as 20 percent in prices.
Fulton acknowledges, while it's not what it was in July, hog profitability is still very good.
He says hog prices are still the highest they've ever been at this time of year so the combination of high hog prices and relatively low feed costs will result in really good profitability for at least the next 4 to 6 months or so.
Source: Farmscape