Low Canadian Dollar Stabilizes Canadian Pork Sector Profitability

By Bruce Cochrane.

The Director of Risk Management with h@ms Marketing Services says the changing value of the Canadian dollar is having a greater influence on the profitability of Canadian pork producers than is the U.S. price of hogs.

Prices paid in Canada for live hogs are typically determined by formulas which are based on prices established in the United States.
As a result of anticipated reduced U.S. exports of beef, pork and chicken due in part to the high value of the U.S. dollar combined with expected larger U.S. slaughter numbers at the tail end of 2016, U.S. hog prices are expected to face pressure.

Tyler Fulton, the Director of Risk management with h@ms Marketing Services says the low Canadian dollar has cushioned the impact on Canadian hog producers.

Tyler Fulton-h@ms Marketing Services:
The Canadian dollars moved up about 6 cents or so over the course of the last month, maybe 40 days or so and that has been a very negative factor on Canadian hog prices and effectively the profitability of, in particular, western Canadian hog producers.

However we're still at a relatively low level in terms of our dollar and that is a major factor that has made us arguably more competitive than our U.S. counterparts and has saved us from some losses to some degree.So it seems the Canadian dollar movements have been more significant in terms of their impact on the Canadian hog prices than what actual U.S. hog prices have been.

Sometimes it's things that you don't anticipate that can have the bigger impact on the price outlook.Fulton acknowledges we are looking at a bearish outlook for pork because it appears the supply will be heavier than consumption.

Source: Farmscape