WHJ-Winter2012

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4 | Western Hog Journal | Winter 2012
AgriACID Ad_Western Hog.indd 1 12/15/10 3:36 PM
Editor’s
Notes
As I write, in mid-December, the hog price is holding up
remarkably well for the time of year and 2011 looks like it
will be the best year for Canadian hog producers since 2006.
During the summer, producers were receiving $200 or more
per hog, a return not seen for a very long time. Admittedly,
margins have been curtailed somewhat by high feed prices,
but overall it was a profitable year, with an opportunity to
shore up battered balance sheets after the damage of the
previous four years.
Feed prices are likely to remain a challenge in the coming
years. The most likely scenario, according to Rabobank
economists, is that corn holds above $6 for most of the year
as ethanol production hits record highs and China imports
more of the grain. The bank predicts corn at an average of
$6.20 during the second half of 2012. Other feed ingredients
will move in tandem, as always. In addition, volatility in feed
ingredient prices seems a given, making it more important to
lock into supplies when the price is attractive.
Higher hog prices in 2011 were driven by record US exports,
up by 20% to 1.26 million tonnes by the end of September.
Exports to China were up over 400% and those to South
Korea by 130%. Although it is questionable whether these
two countries will continue to import so much US pork,
overall pork exports from the USA are likely to support North
American hog prices in 2012.
Difficult times for producers across North America seem to
have curbed any thoughts of expansion, but a recent USDA
Hogs and Pigs Report showed that the average number of pigs
weaned per litter has exceeded 10 for the first time, up from
just 9 in 2005. This 2% per year increase, coupled with higher
carcass weights, will mean that US pork production could grow
by around 3% next year. With slightly declining domestic
demand, the US has to keep working hard on exports.
So what does all this mean for Canadian hog producers?
While world demand for pork is likely to be good, increased
output from the US could keep prices in check, although
production in the EU is falling, which may offset the US
increase. Overall, 2012 is still likely to be a good year, but
most likely rather less profitable than 2011. n