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Autumn Winter Profits for North American Pork Producers

08 September 2014
Manitoba Pork Council


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CANADA - A livestock economist with the Saskatchewan Ministry of Agriculture expects North American hog producers to remain profitable through the autumn and winter in spite of recent declines in live hog prices, writes Bruce Cochrane.

North America hog prices have trended lower over the past six weeks falling about 25 per cent from their July peak but prices are still above long term averages and hog producers are still profitable.

Brad Marceniuk, a provincial livestock market economist with the Saskatchewan Ministry of Agriculture, notes hog prices have started to rebound the last few days both in the cash and futures markets.

Brad Marceniuk-Saskatchewan Ministry of Agriculture:

Profitability over the last few weeks based on the cash market price, it has been significantly impacted likely probably reducing profitability by over $50 per hog.

Hog producers that had locked in prices a few months ago were probably not affected as much.

Feed prices have continued to trend lower this summer which has helped with lowering feed costs so helping producers and feed prices are expected to remain steady this fall with prospects of a good harvest in North America so that should help hog producers.

Moving forward hog prices are still expected to be above long term averages this fall and winter. Feed prices are expected to remain lower than year ago levels, so overall I think producers should continue to profitable but likely not to the same extent as they have been over the last six months.

US hog supply trends and pork cutout values will be the two key factors producers should watch for moving forward.

I think there's still some uncertainty around how the PED virus will affect North American herds this fall and winter.
If the PED virus can be better controlled and hog supplies rebound hog prices could decline to more normal levels.

If the PED virus continues to spread and affect herds reducing North American hog supply numbers again hog prices could rebound to higher price levels again and increase profitability for producers.

Mr Marceniuk acknowledges it is encouraging to see the lean hog futures prices rebound strongly after declining the last six weeks.

 

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