After taking a significant hit for nearly four years, Canada’s live hog exports to the U.S. have begun to stabilize.
Having a more steady supply of hogs is helping, said Tyler Fulton, director of risk management with [email protected] Marketing Services.
“The Canadian herd had been shrinking, but it has now stabilized,” Fulton said. “(The lower volumes) were behind the decline in U.S. exports, and it came from not being very profitable due to the strong Canadian dollar.”
The U.S. country-of-origin labelling (COOL) also played a role, said Brad Marceniuk, livestock economist with the Saskatchewan Ministry of Agriculture.
“There was a lot of concern around COOL, and there were a lot of U.S. processors that wouldn’t accept Canadian hogs,” Marceniuk said. “What’s happened in the last year or so, some of the packers south of the border have accepted some Canadian hogs, so the weanling and feeder market is still able to ship animals to the U.S.”
In 2008, a total of 9.36 million live hogs were shipped to the U.S. from Canada. That dropped to 6.38 million live hogs in 2009, which was a 32 per cent decline. The rate of decline slowed to 10 per cent last year, with 5.76 million live hogs shipped to the U.S. and projections for this year project a two per cent decline.
Through the first three months of 2011, Canada had exported a total of 262,374 live slaughter hogs to the U.S., compared to 283,000 at the same time one year ago. Feeder hogs are down only slightly, 1.186 million live Canadian animals this year versus 1.199 million in the first three months of 2010.
“We’ve also seen very strong weanling and feeder prices in the U.S., so guys are making good money exporting live animals south of the border,” Marceniuk said.
Both Marceniuk and Fulton agreed the recent surge to the US$1.04 level is something that could hurt overall exports to the U.S.
A pickup in domestic demand is also affecting exports, said Fulton.
“What we’ve seen recently is slaughter capacity bumping up, with a new plant that has opened up in the last couple of months in Moose Jaw,” he said. “All the other plants are aggressively trying to add hours to their plants as well.”
Another factor that tempered the demand from the U.S. is the feed cost advantage that Canadian producers hold, especially with the rising cost of corn.
“We will probably see more animals get finished here in Canada, just because it is cheaper to do so,” Marceniuk said.
– tyler fulton, director of risk management with [email protected] marketing services