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Canada/Ontario: Good News and Bad News

by 5m Editor
6 October 2011, at 9:08am

CANADA - An overview of the pig markets and other farming matters in Ontario, Canada, by Bob Fraser, Sales and Service from Genesus Ontario.

As I’ve been reviewing and collecting news and developments in Ontario, Canada over the last number of weeks for this column I was struck with the old line "I’ve got good news and I’ve got bad news, which do you want first?" A line we may have all used perhaps as a lead into a joke. However often the contrast of good news and bad news is all one of perspective. Let's take a look at some examples, writes Mr Fraser.

If we take a look at the OMAFRA Weekly Hog Market Facts compiled by John Bancroft, Market Strategies Programme Lead, Stratford OMAFRA, he showed a last column with a doubling of margin.

The Ontario Market
Week Ending on Friday 15-Jul-11 22-Jul-11 29-Jul-11 05-Aug-11 12-Aug-11
Average price ($/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 $216.09
Weekly Average Dressed Weight (kg) 96.17 95.55 94.81 95.17
Market Hogs Sold 86,149 86,023 89,499 74,351
Market Hogs Sold - % of Previous Year 110% 110% 108% 101%
100% Formula Price ($/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
Est. Grow Finish Feed Cost for Current Week $95.84 $96.40 $95.68 $97.84 $96.87
Est. Margin after Feeder Pig and Feed $20.13 $17.51 $22.64 $34.08 $43.61

Against the same data now with the margin cut to virtually zero only to rebound last week to a quarter of what it had been. Looks like I gave you the good news, then the bad news. However that’s all based on the assumption that you’re in the cash market every week for both inputs and output. Those who have put some time and effort into some astute risk management have different perspective on the news. Let alone a land based system with corn in the silo.

The Ontario Market
Week Ending on Friday 26-Aug-11 02-Sep-11 09-Sep-11 16-Sep-11 23-Sep-11
Average price ($/ckg, DW total value) $209.70 $199.74 $185.18 $179.89
Low price ($/ckg, DW total value) $172.41 $167.72 $154.08 $150.44
High price ($/ckg, DW total value) $225.13 $215.01 $200.13 $193.38
Weekly Average Dressed Weight (kg) 95.31 95.60 96.40 96.78
Market Hogs Sold 87,215 91,194 76,254 102,787
Market Hogs Sold - % of Previous Year 103% 105% 106% 103%
100% Formula Price ($/ckg, 100 index) $182.74 $169.10 $158.92 $155.38 $164.42
Previous Year - 100% Formula Price ($/ckg, 100 index) $161.09 $157.51 $153.79 $154.35 $155.22
Weaned Pig Value (C$/pig) - Formula Value $47.51 $43.97 $41.32 $40.40 $42.75
Feeder Pig Value (C$/pig) - Formula Value $75.38 $69.75 $65.55 $64.09 $67.82
Est. Grow Finish Feed Cost for Current Week $100.56 $101.11 $98.96 $95.31 $89.91
Est. Margin after Feeder Pig and Feed $32.25 $14.49 $2.64 $0.73 $11.57

Another example of "good news – bad news"

Ontario corn yield down from last year, says tour

Last week's Great Lakes Grain tour concluded that Ontario's cornfields will yield 157 bu/acre this year, down 21 bu/acre from last year's 178 bu/acre.

For soybeans the tour estimated the yield at 45 bu/acre, down 3 bu. from last year.

So which is it? From the perspective of last year perhaps bad news, however last year was the best year on record in Ontario and these yields by most measures would be considered a good if not a very good crop. Although what we do in Ontario has close to no bearing on overall price, once again the land based system looks set to be blessed with adequate grain supplies.

A final example of "good news – bad news".

Record prices for Ontario farmland

Rising agricultural commodity values and tight inventory levels have seriously contributed to a significant upswing in the price of Ontario farmland in 2011, according to a report released Monday by RE/MAX Ontario-Atlantic Canada.

The RE/MAX Market Trends Report - Farm Edition 2011 found that shortages exist in the vast majority of centres studied, with pent-up demand fuelling unprecedented momentum virtually across the province. Upward pressure on acreage values has been consistent as a result. Of the 12 major agricultural communities examined, 11 (92 per cent) reported tight inventory levels, while nine (75 per cent) noted an increase in price per acre. Despite the current volatility in commodity prices, the long-term prospects for the agricultural industry continue to be bolstered by global realities, including population growth, an international grain shortage and decreased availability of quality farmland from a worldwide perspective.

Genesus Global Market Report
Prices for week of 26 September 2011
Country Domestic price
(own currency)
US$
(per pound liveweight)
USA (Iowa-Minnesota) 89.50¢
US$/lb carcass
66.23¢
Canada (Ontario) 1.69
C$/kg carcass
58.58¢
Mexico (DF) 21.27
MXP/kg liveweight
68.87¢
Brazil (south region) 2.43
BRR/kg liveweight
58.30¢
Russia 88
RUB/kg liveweight
$1.25
China 19.15
RMB/kg liveweight
$1.36
Spain 1.22
€/kg liveweight
72.95¢