WINNIPEG – Hog prices in Manitoba and Saskatchewan reached five-year highs last week, and Alberta prices are also unusually strong.
But that doesn’t mean producers are bringing home a lot more bacon.
Gerry Friesen, who raises hogs near Wawanesa, Man., said it’s costing about $20 more to feed a pig to market weight now because of rising feed prices.
“People talk about the high hog prices we have and yet they don’t realize that at the other end of it, our input costs are a lot higher as well,” Friesen said.
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Janet Honey, a market analyst with Manitoba Agriculture, said with the current feed prices, farmers should be able to break even with hog prices of $1.65 per kilogram. Last week, prices in Manitoba and Saskatchewan rose above the 1990 high of $1.72 a kg.
Friesen, who is also a director of Manitoba Pork, said raising hogs “is profitable right now, but not as profitable as the market kind of indicates that it is.”
Feed won’t drop soon
Ward Toma, an economist with Alberta Pork Producers, said feed prices will probably stay high for another month until new-crop barley gets into the system.
It’s been a roller coaster year for hog markets: Producers saw the market bottom out at unprecedented lows of 96 cents per kg last November. It rose to $1.42 a kg in February, and then fell to about $1.25 in April.
Analysts knew that summer prices would be stronger. That’s the trend they follow every summer. But no one predicted they’d rise this high.
Honey said that last fall she predicted August prices would be around $1.40 per kg. “But there’s no way that I ever expected it to be up to $1.73.”
Prairie prices closely follow the U.S. market. Toma said production in the United States has been quite strong this summer. “Demand has been the saving factor for the hog markets this year,” he said.
Higher export price helps
The wholesale price for pork remained strong, Honey added, so U.S. packers could afford to pay the higher prices.
The United States has also been exporting a lot of pork.
“That’s helped move product away from the U.S. markets,” Toma said. “I think it’s given it a real boost. Packers have these extra sales that they want, along with their normal sales.”
Honey said exports have risen because of new world trading rules under the General Agreement on Tariffs and Trade. In the first five months of this year, U.S. exports rose more than 70 percent from the same period last year. She said Canadian exports are also up by 13 percent.
Analysts say extreme heat in the United States has also slowed deliveries, helping raise prices.
“The packers, with fewer hogs coming around now, are bidding very aggressively for available supplies,” said Don Hrapchak of Saskatchewan Pork International.
Hrapchak said prices in upcoming weeks will depend on slaughter volumes in the United States. Fellow analyst Toma agrees.
“It’s suspected that a lot of hogs are still backed up in barns in the U.S. because the heat has slowed their growth,” Toma said, adding they may come to market in September and depress prices.
