(Resource News International) –– U.S. hog prices are expected to show some improvement over the next year, but that strength won’t be felt in Canada where foreign exchange rates will continue to hamper the industry.
That’s according to market analyst Steve Dziver of Phoenix Agri-Tec Inc. in a presentation Tuesday at the Canadian Wheat Board’s annual GrainWorld conference in Winnipeg.
Canadian hog prices are directly linked to the U.S. market, with the currency exchange rate between the two countries the largest factor in determining Canadian values, Dziver said.
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U.S. hog prices would be profitable in 2010, he said, but on the Canadian side any profitability will require better risk management and a strategy to deal with the strong Canadian dollar.
Given the current state of the industry, he said, it was hard for Canadian hog producers to be profitable with a Canadian dollar above US90 cents, as is currently the case.
Some of the expected increase in U.S. prices in 2010 will be tied to the Canadian situation, where producers have been steadily reducing the size of the sow herd.
Dziver said the smaller Canadian hog production, together with U.S. country-of-origin labelling (COOL) regulations, will mean that fewer Canadian hogs will make their way to the U.S.
The reduced Canadian numbers should be felt by the U.S. industry, improving values, he said.
