Lower Feed Ingredient Costs Expected to Drive Prolonged Hog Industry Profitability

Farmscape for August 20, 2013

The director of risk management with h@ms Marketing Services is confident lower feed costs will result in improved profitability within the Canadian pork industry well into 2014.
A combination of factors including a solid demand for pork, reduced feed ingredient costs and the weaker Canadian dollar relative to the U.S. dollar have dramatically improved the profitability picture for Canadian pork producers.
Tyler Fulton, the director of risk management with h@ms Marketing Services, says it's really a tale of two crop years.

Clip-Tyler Fulton-h@ms Marketing Services:
Last year we dealt with extremely tight feed stocks across North America simply because of the U.S. drought and that shot feed ingredient prices up to record levels or near record levels.
While we're still dealing with the fallout of that there really is a tangible optimism amongst producers for this crop year.
Whether we're talking western Canada or right across North America the crops look significantly better than they did last year and consequently feed ingredient prices are down significantly from last year and that is really the game changer from a profitability standpoint.
Going forward we've still got a long ways before harvest is complete but going forward I think it's entirely likely that we could be looking at positive hog profitability right through to the end of the year and well into next year, really as far out as we're projecting and that profitability usually is the driver to expand in the industry.

Fulton acknowledges profitability breeds expansion and with expansion comes a downturn in price.
However he doubts we'll see a significant expansion in the North American hog industry over the next 10 to 12 months.
For Farmscape.Ca, I'm Bruce Cochrane.

       *Farmscape is a presentation of Sask Pork and Manitoba Pork Council