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U.S. Mandatory Price Reporting Key to Continued Smooth Operation of Canadian Hog Markets

By Bruce Cochrane

The director of risk management with h@ms Marketing Services says information gathered through U.S. mandatory price reporting is critical to the continued smooth operation of Canadian hog markets.

Last week the U.S. Senate reauthorized the livestock mandatory price reporting law, which was set to expire Wednesday.

The statute requires meat packers to report the prices they pay for cattle, hogs and lambs and other information to the USDA which publishes two daily reports on pricing, contracting for purchase, supply and demand conditions for livestock, livestock production and livestock products.

Tyler Fulton, the director of risk management with h@ms Marketing Services says this information is critical to the smooth operation of markets in Canada.

Tyler Fulton-h@ms Marketing Services:
The Canadian industry runs largely based off of formula prices that are a function of the U.S. cash market and so, without those reports that provide transparency as to what the cash market is running, the way that we do business would be put at risk.

The reality is that the hog industry is truly a North American industry and so, regardless of how it's done, Canadian producers and packers need to be competitive with their U.S. counterparts.
Without that law we would need to figure out a different way to ensure that we're being competitive.

In the past there have been instances where the law has lapsed which resulted in periods where there wasn't a reported price for Canadian producers to reference and that's widely disruptive to our daily operations of most packers and producers.

Fulton says Canadian hog delivery contracts typically include a formula that references a U.S. pricing point and, while the information obtained through mandatory price reporting is not an absolute necessity, it allows us to continue to operate on a status quo.

Source: Farmscape

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