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Weaker Canadian Dollar Offsets Declines in Live Hog Prices

by 5m Editor
11 January 2007, at 10:40am

CANADA - Saskatchewan Agriculture and Food reports a lower Canadian dollar has offset some of the recent price declines for live hogs caused by higher US slaughter numbers and higher volumes of red meat in cold storage, writes Bruce Cochrane.

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Although North American hog prices have declined since the beginning of December, a weakening Canadian dollar has kept Canadian prices from falling as much as US prices.

Livestock economist Brad Marceniuk says the key factors pressuring US prices are higher US slaughter numbers and increased stocks of red meat in cold storage.

Brad Marceniuk-Saskatchewan Agriculture and Food
Looking at the US hog slaughter numbers over the last eight weeks, slaughter numbers continue to be about 1.6 percent higher than over the same period a year ago.

Based on the latest USDA hogs and pigs report, the US breeding herd has actually increased by about 1.3 percent over the last year.

With this increase US hog production is estimated to increase by at least two percent in 2007 which will further increase US hog slaughter numbers for 2007.

However higher corn prices in the US may however reduce some of these slaughter weights in 2007 maybe capping some of the production increases.

Looking at pork stocks, while US pork stocks at the end of November were down from October, pork stocks are up about six percent from November of 2005.

Likewise beef stocks in cold storage up over 17 percent from a year ago.

Poultry stocks are however down from last year at the same time.

In Canada the drop in the Canadian dollar from about 88 cents to 85 cents from late November to the present time has been positive for Canadian hog prices.

The direct change in exchange rate has added about four to five dollars per hog for Canadian hog producers since the end of November.

Marceniuk notes most Canadian producers continue to operate at below break even, however prices are expected to improve in the first and second quarters of 2007.

ThePigSite News Desk

5m Editor