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Hog Price Improvement Expected Despite Higher Exports South

by 5m Editor
12 August 2003, at 12:00am

CANADA - Farm-Scape: Episode 1318. Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council and Sask Pork.

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Manitoba Pork Council and Sask Pork

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Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork.

Farm-Scape, Episode 1318

An Analyst with Phoenix Agritech predicts some improvement in the price of hogs over the next few weeks, in spite of higher shipments south.

Phoenix Agritech Risk Management Specialist Andrew Holtmann says the higher number of Canadian hogs going south can be broken into two groups, weanlings and market hogs.

He says weanling exports are about 30 percent higher than last year due to increased production being dumped into the US while market hog exports have jumped by 17 to 20 thousand head per week because of a strong Canadian dollar and decreased domestic pork consumption as consumers shift to beef.

"The utility of consumption per capita is very steady in both Canada and the US.

We tend to eat the same amount of meat every year.

We're seeing an increase in the consumer appetite currently for beef because of the BSE situation supporting the domestic beef industry.

That's had a direct result in less pork consumption which has made it a difficult market for the pork packing industry right now.

They've responded to that by cutting back their weekly slaughter numbers. With the current rate of 17 to 20 thousand surplus market animals a week, that's about equivalent to one percent of the US slaughter.

During this time of year our elasticity of supply, which is the percent change in price given a one percent change in supply, is about seven percent.

A one percent increase in the overall slaughter because of Canadian animals moving south has resulted in a seven percent drop in the price in the US which is basically equivalent to what we've seen in Canada.

That's because most hog prices in Canada are formula driven off of what happens in the US. ".

Holtmann says, although we are seeing an increase in Canadian hogs going south, we can expect the liquidation of the sow herd that started at the end of last year to result in a decrease in total slaughter numbers as we move toward the end of August.

He says that means we can expect to see some price improvement over the next three to four weeks.

For Farmscape.Ca, I'm Bruce Cochrane.

5m Editor