Even in bad years Manitoba farmers make money on weanling pig sales to American buyers.
That’s the conclusion Manitoba Agriculture livestock market analyst Janet Honey reached from looking at 2002 weanling export sales. Last year was the fourth in the four-year hog cycle, containing the price slump that generally paves the way for better times in the next four-year cycle.
“This year, on average, producers made money on weanlings even if they sold them on the spot market, even though some of them got only $6 or $7 a pig in August and September,” Honey said in an interview during the Canadian Wheat Board’s Grain World conference.
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“Producers made money.”
Usually the hog cycle slump comes in the fourth quarter (October-December), but this year it occurred in late August and September. Many weanlings sold to U.S. buyers were covered by price contracts that protected Manitoba producers from heavy losses.
But other weanling exporters still sell pigs on the cash, or spot market. When the price slump came, spot prices collapsed, causing losses.
Buyers reneged on price contract deals with some producers, leaving them with unsold weanlings in a market that had an apparent glut.
But Honey said the August-September losses did not neutralize profits made before and after the slump. The market soon picked up again.
Not only did the slump end after only a few weeks, but December prices sharply rebounded. Weanling prices are generally tied to four-to-six-month-out lean hog futures contracts. In December, they reflected profitable spring futures prices.
Most of Manitoba’s weanling exports go to hog feeders in Iowa and southern Minnesota. Corn subsidies make that feed grain cheap, so American buyers can make weanling bids that Canadian exporters find profitable.
In good years, weanling exports have been a lucrative business, Honey said, especially in 2000 and 2001 – the high points of the last hog cycle.
“Some of those producers were making $40 or $50 a pig.
“That’s not bad for a 10 pound pig that’s on your farm for 15 days.”
