Strong prices, low feed costs reviving pork industry

(Photo courtesy ARS/USDA)

CNS Canada –– Recent strong prices, paired with low feed costs, are increasing profitability for Canadian hog farmers and helping to revive the pork industry.

“We are seeing some of the idle barns that were taken out of production three years ago starting to come back into production,” said Brad Marceniuk, livestock economist with Saskatchewan’s agriculture ministry in Saskatoon. “So we’re seeing some of the barns in Saskatchewan get repopulated.”

The recent rise in prices for live hogs in Western Canada is linked to firming pork cutout values, strong demand for pork and weakening Canadian currency.

Selling into the Canadian cash market remains routine, as farmers only have a certain amount of hogs to market each week. But overall supplies in North America could be larger than first anticipated this fall, Marceniuk said.

There were fewer cases of porcine epidemic diarrhea (PED) reported throughout the summer in North America, as the virus doesn’t spread as well in hot conditions, he said.

“The amount of pigs born alive for the third quarter was not too far off from the same time last year, so we’ll likely see more supply coming to market over the month or two, and that could put some pressure on prices.”

Typically, values move lower in the fourth quarter, so prices are likely to drift down going forward. But farmers will still make good profits because of lower feed costs, Marceniuk said.

What happens in the New Year is still up in the air, because there could be more deaths related to PED this fall, which would reduce supplies for early 2015.

In the past few weeks, there have been a handful of new cases reported in Western Canada, as the return to cooler weather has helped the disease spread.

“I don’t think expectations are for as many cases (of PED) as there were last year, but we don’t really know that for sure,” Marceniuk said.

Farmers will have to continue to clean trucks and barns diligently, as “biosecurity continues to be the main objective for producers to keep the disease out of the barn,” he added.

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

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