Canada-Future looks bright for Pig Farmers again.
CANADA-PIG FARMING LOOKING GOOD AGAIN.
Canadian hog producers, suffering one of their worst price downturns in memory, should begin to make money in the second quarter of this year, a local industry analyst says.
Steve Dziver, a risk management specialist with Phoenix Agri-Tec Inc., said that last week was the first week in more than two years that Canadian producers would have earned a profit selling market weight hogs, assuming cash costs of $135 a hog, as prices broke above $140.
"It was the first week in about 26, 28 months that anyone actually made any money other than if (they) had done some very aggressive hedging," he told the GrainWorld outlook conference in Winnipeg on Tuesday.
Low market prices, exacerbated by a high Canadian dollar and, more recently, mandatory U.S. country of origin labelling legislation (COOL), have devastated the Canadian industry, throwing many producers out of business.
Canadian hog farmers are at the mercy of the American marketplace -- where their prices are set -- and a fluctuating loonie that can assure them a profit when it’s very low and ensure that they lose money when it’s very high, as it has been until recently.
"It’s (a) good business sub-80 (cents US). It’s a tough business around 85 cents. You’re not in business at 90 cents or over," Dziver said, referring to various Canadian dollar levels vs. the U.S. greenback.
Factoring in an 82 cent dollar (it closed Tuesday at 80.43 cents US) and falling North American production numbers, Manitoba producers, who normally lock in feed costs in advance, should start to make money on market-weight hogs by April or May, he said.
Already, Canada has reduced its shipments to the U.S. of finished hogs to 10,000 a week from 80,000 to 90,000 early in 2008. That reduction is expected to become permanent. But the number of feeder pigs and young weanlings heading south is also declining because of COOL. That number is at about 100,000 a week compared with 160,000 a year ago.
Agriculture led gains on Scotiabank’s monthly commodity price index, which ended its five-month losing streak in January on strong buying out of China.
"A big jump in the agriculture index -- up 9.5 per cent month over month -- led the way in January," said Patricia Mohr, Scotiabank’s commodities market specialist. Canola prices (the highest value Canadian crop) strengthened significantly in response to buying by China’s State Reserve Bureau.
"China’s imports of Canadian canola (is) welcome news for Prairie farmers who harvested a record canola crop last autumn," said Mohr. Spot canola prices rose to $367 US a tonne in January from $328 a tonne in December.
