GrainWorld: Pork market dependent on grain prices

Thursday Mar 03 2011
by Commodity News Service Canada, www.manitobacooperator.ca

Canadian pork producers are starting to see a return to profitability, but it's too early to tell if they are completely out of the woods yet.

That's according to Richard Anderson, executive vice-president of Informa Economics in Memphis, Tenn., who spoke Tuesday at the Canadian Wheat Board's annual GrainWorld conference in Winnipeg.

On the positive end of the spectrum, Anderson said, export demand is as solid as it has been in quite some time.

"Right now we have a fairly vibrant marketplace, with a number of emerging markets," Anderson said. "As well, there is some lively two-way trade between Canada and the U.S."

While pork prices have been edging higher, so too have input costs, with the most significant one being the price of corn, Anderson said.

Current corn prices for the March contract on the Chicago Board of Trade (CBOT) are worth US$7.2725 per bushel, which is the highest they have been in some 32 months.

Anderson said if the price of corn continues to trend higher, the profitability of hogs will be very limited.

When hog prices were at their lowest levels, a number of producers got out of the business. Anderson hopes that doesn't have to happen again.

"All segments of the North American hog industry have contracted," he said. "The question is, have we cut production enough to get solid prices, or will we have to go through it again?"

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