Hog producers made money in this year’s fourth quarter, but Canadians made less than U.S. producers.
“The Canadian dollar took a chunk out of it, but otherwise pork exports from North America kept us in the running,” said Tyler Fulton, head of risk management for Manitoba Pork Marketing.
Analysts say the traditional fourth quarter hog price slump was minor this year compared to some years.
University of Missouri hog market analyst Ron Plain said only one day in the quarter saw prices fall to break-even levels, but overall most farmers made about $10 per head.
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“When you can get through the worst time of the year with that kind of profit, it’s been a good year for producers,” said Plain.
Farmers have benefited from strong pork prices and low feed grain prices, the result of the second 11 billion bushel corn crop in a row in the United States.
But Plain said record crops aren’t likely to endlessly repeat themselves, so his outlook for next year is based on a smaller corn crop, and that could make the fourth quarter of 2006 less profitable than this year’s.
“We’re expecting producers will lose a little bit of money in the fourth quarter of 2006,” said Plain.
But it won’t be a terrible year.
“We think producers are going to make money in ’06. Three quarters of profit and one quarter of small losses works out to a profitable year.”
But Plain said 2007 may be grim. U.S. producers have seen 22 months of profits. Plain expects that to extend to 32 months, but then the herd expansions of the last few years may come home to haunt producers.
“2007 could be a rather unpleasant year for producers,” Plain said.
Fulton said the hog market is already looking less rosy going into 2006. Pork exports from North America, while rising, are not rising nearly as quickly as they did in the past few years.
Exports supported hog prices this year, so any slowing of exports will cause prices to sag.
“It’s not the same robust growth we’ve seen,” said Fulton.
