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Canadian pork production is forecast to be down nearly 80 million mt from 2008

US Broiler Production

(Million pounds)

US Pork Production

(Million pounds)

Cash hog prices appear to be stabilizing in line with seasonal tendency to strengthen into the second quarter. The USDA recently made revisions to their expected production and the demand has also improved due to lower poultry and beef supplies. Pork is still the most competitively priced meat and this is bringing on demand during the recessionary period. Peoria hog values are quoted at $36.50/ kg in line with previous weeks but ideas are the cash market will strengthen in March. Prices in Western Canada were reported at $1.20/kg to $1.30/kg. The slaughter pace is running below expectations resulting in lower supplies. Packing margins are struggling in negative territory and this is keeping the market under pressure. However, retail movement remains brisk and we are looking for steady movement over the next couple months.

The USDA lowered first quarter pork production by 55 million pounds on their February report; However, 2009 pork exports also decreased by 100 million pounds from earlier projections due to the lower slaughter pace. Without going into detail, the U. S. domestic market will only have to absorb an additional 500 million pounds of pork. On a per capita basis this is only an additional 0.7 pounds which is marginal given the population increase of almost one percent

U. S. broiler production was lowered in each quarter and total 2009 production is now 148 million pounds below the January estimate and down 682 million pounds from total production in 2008. For broilers, per capita consumption is now basically the same as last year. Due to lower cattle inventory numbers, total beef production was also decreased by 430 million pounds and per capita consumption of beef will now be under year ago levels. This is all constructive news for the hog market.

In Canada, the slaughter pace is running very similar to last year but we are expecting lower pork production and lower exports of pork and live hogs to the U. S. Canadian pork production is forecasted to be 1.76 million mt,

























down nearly 80 million mt from 2008 production. This is largely due to a smaller pig crop and a decrease in slaughter capacity.

Looking at the demand, we have seen further weakness in the economy. Canada is expected to lose 325,000 additional jobs this year, bringing the unemployment rate to nearly 10 per cent by the end of 2009. This is about 125,000 higher than earlier estimates. Analysts feel U. S. unemployment could reach 10 per cent by September 2009. The Dow Jones industrial average is now under 8,000 and could move lower. Retired people are having to sell additional assets to keep up the same standard of living. At this time, it is difficult to say when the U. S. $789 billion stimulus package will start to influence the overall economy. Money available for food stamps will increase under the U. S. stimulus package but it is difficult to say this will increase pork consumption. Consumer confidence remains at record lows and spending is still contracting. High end restaurant demand remains sluggish and this is having a large influence on the carcass value.

I feel producers do not need to take any protection for nearby sales and marketings into June. However, for July forward, I feel producers should take some price protection because the August lean hog futures are near record highs.

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