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Global Market Report – Canada

by 5m Editor
26 August 2011, at 9:30am

CANADA - Better days are ahead for Ontario pig producers, writes Bob Fraser, Sales and Services for Genesus Ontario.

In his last column, Mr Fraser suggested 'better days ahead'. He says he is a 'glass half full' candidate. It would be difficult operating in this business without being an optimist. Also with better days ahead, he says he was thinking about a time line a little longer than a month. However, he goes on to take a look at least in his area of Ontario.

The Ontario market
(OMAFRA Weekly Hog Market Facts compiled by John Bancroft, Market Strategies Program Lead, Stratford OMAFRA)
Week ending on Friday 15-Jul-11 22-Jul-11 29-Jul-11 5-Aug-11 12-Aug-11
Average price (C$/ckg, DW total value) 194.28 188.39 193.08 202.53
Low price ($/ckg, DW total value) 165.70 158.60 164.79 171.26
High price ($/ckg, DW total value) 207.28 201.78 206.85 216.09
Weekly average dressed weight (kg) 96.17 95.55 94.81 95.17
Market hogs sold 86,149 86,023 89,499 74,351
Market hogs sold (as % of previous year) 110 110 108 101
100% formula price ($/ckg, 100 index) 166.72 164.90 171.65 183.88 192.95
Previous year - 100% formula price ($/ckg, 100 index) 146.96 148.03 154.01 157.72 157.27
Weaned pig value (C$/pig) – formula value 43.35 42.87 44.63 47.81 50.17
Feeder pig value (C$/pig) – formula value 68.77 68.02 70.81 75.85 79.59
Estimated grow-finish feed cost for current week 95.84 96.40 95.68 97.84 96.87
Estimated margin after feeder pig and feed 20.13 17.51 22.64 34.08 43.61

Mr Fraser continues that there is a $23.48 increase in margin after feeder pig and feed or 117 per cent improvement in margin in a month. Not sure even I was that optimistic but probably qualifies as 'better' by most anyone's definition. Of course, the question always remains "Yes but will it last?" Part of that lies in whether the 15,000 head or more than seven per cent drop week-on-week in market hogs sold is just an aberration of summer heat and a holiday shortened week or something deeper going on. Certainly in my travels in Canada I don't see anything to give us more market hogs anytime soon beyond the normal seasonal 4th quarter expansion, and as a genetic salesman, I have reason to be looking hard for any sow expansion.

So supply looks at worst to be flat. As for demand we are setting new price highs and perhaps establishing a new price plateau more in synch with the apparent new price plateaus of grains. Finally, on the demand side as Canada very much appreciates as a trading nation is exports are strong and look to remain so as reinforced by Jim Long’s recent around the world Commentaries. Therefore the supply/demand balance looks favourable to prices but what about from the cost side? Will it be enough to outstrip grain and feed prices?

From his view of his own share-cropped corn this year and just what he sees from the road in his travels, the crop well perhaps not great has recovered marvellously from a difficult spring to certainly look like a good, if not a very good crop. Now, he says, this may be the view of 'rose-tinted' glasses. However, it seems supported by an article in this week's Ontario Farmer newspaper on entitled 'Corn crop makes a comeback'. The article quotes several seed corn agronomists suggesting the following 'Just a month ago, there were plenty of concerns about the crop's uneven development, pollination and cob fill in hot, dry weather, and its ability to mature on time. Not all the concerns have been alleviated but things look a lot better as the crop approached mid-August.' The article goes on to suggest the crop has caught up three weeks over the course of the summer and now with timely rains, suggesting at least average yields of 145 bushels with potential of 200+ in some areas. So, not the bin buster of 2010 but hardly a disaster either.

Mr Fraser adds that he appreciates Iowa may spill more corn than Ontario grows such that the latter crop has little if any bearing on price. Nevertheless for the land-based pork producers, the backbone of the Ontario swine industry, it looks like their corn supplies will be adequate allowing them to maximise their return on corn putting it through hogs.

In summary "better days ahead", he adds. He believes we have already made significant gains that we might consider as we navigate the challenges of a volatile environment.

Genesus Global Market Report
Prices for week of 15 August 2011
Country Domestic price
(own currency)
US$
(per pound liveweight)
USA (Iowa-Minnesota) 101.39¢
US$/lb carcass
75.02¢
Canada (Ontario) 1.89
C$/kg carcass
69.52¢
Mexico (DF) 22.10
MXP/kg liveweight
80.76¢
Brazil (south region) 2.23
BRR/kg liveweight
63.06¢
Russia 94
RUB/kg liveweight
$1.47
China 19.29
RMB/kg liveweight
$1.37
Spain 1.23
€/kg liveweight
80.30¢