The generally optimistic and happy atmosphere here at the World Pork Expo in Des Moines, Iowa, wasn’t undermined by the market outlook session I just attended.
Steve Meyer of Paragon Economics noted that producers can now lock in profitable margins for the next 15 months, with margins possibly widening in the next couple of months as the U.S. corn crop develops. Since the corn crop is looking great, it will likely fall in price going into harvest, while hog prices are likely to remain relatively stronger than corn. So either using present hog futures prices or waiting to lock in while corn falls could bring even better margins than now. But at an estimated $16.25 per head profit for hogs marketed in 2010, this year will be a good year for American producers.
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But it seems much less wonderful to Canadian hog producers, a number of who were in the audience. When you factor-in the much higher loonie that we live with now, Canadian margins are much more greatly squeezed and every month isn’t likely to be a profitable month for Canadian producers. But within Canada, too, there are big differences between zones, I have discovered from talking to farmers here at the show. Quebec and Manitoba producers seem to be doing better, with Quebec packers churning away and U.S. farmers sopping up Manitoba weanlings again, but Ontarians are suffering as they see their packer capacity slipping away and U.S. weanling buyers driving up weanling prices to levels that don’t leave any margin for Ontario farmers who have to compete with them.
So it’s odd being Canadian here, hearing nothing but good news and sunny skies ahead, but knowing that north of the border there are still hog farmers in trouble.
