Canada’s hog producers posted profits during the summer, but the outlook heading into the fall is uncertainty, according to the general manager for [email protected] Marketing Services, which represents producers in Manitoba and Saskatchewan.
“From mid-May to present, I would suggest that most producers have made money,” Perry Mohr said.
“However, I think people are kind of getting disillusioned about the price being as high as it is and the talk about feed prices going down. It’s true when you talk about the new-crop prices, but right now corn and soybean prices are still relatively high if you’re buying stuff in someone’s bin today.
Mohr said hog prices have dropped $10 per 100 kg (ckg) the last few weeks.
“Ironically, part of the decline in prices is due to the Canadian dollar moving from roughly US94 cents a few weeks ago to around 96 cents,” Mohr said.
“The second component is that cut-out in the U.S., which hit record levels a few weeks ago, has come off considerably. Packers went from making US$20 per hog to losing US$10 per hog in a short time. They’ve adjusted cash bids to account for that.
“Hog supplies will also increase gradually into September and October, which corresponds with a decrease in demand for pork,” Mohr added.
However, the biggest factor for the downward trend seen in hog prices is coming from the potential record U.S. corn crop.
“We know there is a record amount of corn acres planted and we fully expect corn prices to be US$5 per bushel or less for a good part of next year,” Mohr said. “Based on the fundamentals we have a handle on now, it will decrease hog prices.”