Hog producers still losing money

Hog producers in Canada are still losing money because of high feed prices, according to industry officials.

Current hog prices are actually above the long-term average, but because feed costs are so high, producers are still unable to turn a profit, said Brad Marceniuk, livestock economist with Saskatchewan’s ministry of agriculture in Saskatoon.

According to the ministry’s weekly hog report, released Monday, the average price for the week on the Signature#3 (Maple Leaf) Index 100 was $147.59 per ckg, down 1.6 per cent from the previous week.

Canadian hog farmers started to run into trouble in September 2012, when prices crashed due to high feed costs, and were unable to turn a profit. The situation even caused some operations to shut their doors.

Prices were starting to recover, and were getting closer to breaking even earlier in 2013, but in March the market fell once again, Marceniuk said.

Part of the reason hog prices are failing to climb above breakeven is because a late spring in Canada is curtailing some of the demand.

“The demand has been a little weaker since there’s not as many people barbecuing yet,” said Marceniuk.

Some price weakness is also linked to weak export demand, as issues over the use of the feed additive ractopamine have curtailed some of the buying interest from Russia and China.

Because producers have been losing money for an extended period of time, some are struggling to stay afloat, said Marceniuk.

“I’ve heard a lot about Manitoba producers who are on the edge,” he said. “They’re holding on, but not for much longer.”

But, a brighter outlook is keeping some producers optimistic that they will turn a profit soon, and preventing them from exiting the industry.

Prices should move higher come summertime, when demand starts to pick up, Marceniuk said.

“Typically what happens is in the spring and summer the demand for pork increases with the barbeque season,” he said. “So, prices should improve over the next few months, which would help producers.”

Ideas that feed prices will move lower come the fall are also promising for Canadian hog producers.

“Everybody is waiting for the next crop year, in September/October, because they think the prices will be significantly lower.”

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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