Good news has appeared on the horizon for Prairie hog producers, according to a market analyst with Manitoba Agriculture.
Hog prices have already bounced back from the devastating lows of late 1998, and Janet Honey believes hog producers should start seeing profits by the end of the winter.
Honey foresees Manitoba Index 100 hog prices averaging $1.18 to $1.28 per kilogram this year, including all premiums. In the fourth quarter, she predicts prices will rise to $1.30 to $1.40 per kg.
“I’m being conservative because there are so many things that could keep the prices down,” said Honey, who presented her outlook at Manitoba Ag Days in Brandon last week.
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Honey cited four main factors that will affect hog prices this year in Manitoba: the provincial slaughter capacity, American hog prices, the value of Canada’s currency, and export demand for pork in Canada and the United States.
Slaughter capacity rising
Manitoba’s slaughter capacity is expected to rise dramatically this year. Maple Leaf Meats will start slaughtering hogs at its new Brandon plant this summer and Springhill Farms at Neepawa is also expanding. Smithfields majority takeover of the Winnipeg Schneiders plant could also bring changes, she said.
The Maple Leaf plant and the expansion at Springhill Farms could cause a 25 percent jump in the number of hogs slaughtered in Manitoba. That would push the tally to over 3.4 million head.
“I think that Maple Leaf will be prepared to pay a bonus to producers to get the hogs that would normally go down to the U.S. plants,” Honey said. “If they’re willing to pay a bonus to keep the hogs then obviously the other plants will have to pay higher prices just to compete.”
Higher dollar possible
Manitoba hog prices are also linked to the price of hogs in the United States and to the exchange rate of the Canadian dollar. Honey said the value of the Canadian dollar could rise slightly this year, putting downward pressure on Canadian hog prices.
As for what will happen in the export markets, only time will tell. Russia, Japan and Korea could each have a role to play in how exports unfold.
Russia boasts a large population, but is struggling with a weak currency. Japan, a price conscious country, promises to remain a good customer as long as pork prices are reasonable. As for Korea, a small, but potentially good market, pork exports were down 71 percent last year, said Perry Mohr, marketing manager of Manitoba Pork. He hopes to see a turn-around in that market this year.
Last year’s slump in hog prices caused “major hardships” for hog producers, said Manitoba agriculture minister Harry Enns. However, he said the pace of new barn construction remains strong.
The Manitoba pork industry has almost doubled its production in the past decade, Enns said. With the promise of more packing capacity in Manitoba, he predicts the province could become a price-setter for hogs in North America.
