After taking a significant hit for nearly four years, Canada’s live hog exports to the U.S. have begun to stabilize.
Tyler Fulton, director of risk management with [email protected] Marketing Services in Winnipeg, said the Canadian hog herd has also been stabilizing, so there are more animals that can be shipped.
“The Canadian herd had been shrinking, but it has now stabilized,” Fulton said. Those lower volumes “were behind the decline in U.S. exports, and it came from not being very profitable due to the strong Canadian dollar.”
Brad Marceniuk, livestock economist with the Saskatchewan Ministry of Agriculture in Saskatoon, said the drop in exports was due to uncertainty in the U.S. regarding mandatory country-of-origin labelling (COOL).
“There was a lot of concern around COOL, and there were a lot 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.”
A total of 9.36 million live hogs were shipped to the U.S. from Canada, in 2008, while 2009 saw 6.38 million live hogs shipped south, a 32 per cent decline. The decline from 2009 to 2010 was only 10 per cent, with 5.76 million live hogs shipped to the U.S. in 2010. Projections for 2011 show live exports are to decline by only two per cent from last year.
Through the first three months of 2011, Canada had exported a total of 262,374 live slaughter hogs to the U.S., which compares to 283,000 at the same time one year ago. As for feeder hogs, a total of 1.186 million live Canadian animals have gone to the U.S., which compares with 1.199 through 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.
As is the case when talking about any type of exports to the U.S., the value of the Canadian dollar is always an important issue. Both Marceniuk and Fulton agreed the recent surge to the US$1.04 level could hurt overall exports to the U.S.
Asked why there has been such a decline in totals since 2008, Fulton said one reason was a pickup in domestic demand.
“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, Sask. All the other (pork packers) are aggressively trying to add hours to their plants as well,” he said.
Another factor 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.