Reduced Grain Costs Expected to Fuel Prolonged Hog Industry Profitability

By Bruce Cochrane

An executive member of Manitoba Pork Council's board of directors expects dramatically improved crop production this year and subsequent lower feed grain prices to result in profits within the hog industry for at least the next year.

A the result of dramatically reduced grain supplies due to the 2012 drought that hit the U.S. feed grain costs soared resulting in significant losses for hog producers.

George Matheson, an executive member of Manitoba Pork Council's board of directors says across Manitoba, across western Canada, the U.S. and most places in the world 2013 has been a good crop year so feed costs have fallen and will probably stay at levels similar to where they are now and possibly even decrease.

George Matheson-Manitoba Pork Council:
There's definitely a lot of grain out there this year.
I think most grain producers will say they've never quite seen anything like it and have the enviable problem of lacking bin space as harvest progressed.

A lot of people call it a year and a half worth of crop, 50 percent greater than usual.
I would say last year at this time corn might be going for eight dollars a bushel.

Lately I think it's around 5.50 or so.
Barley has dropped from six maybe to four dollars roughly.
Wheat eight to nine dollars down to 6.50 so it's significant.
That is reasonably high though but it's definitely moving in a direction where hog production can be profitable, hopefully for an extended period of time, at least 12 months.

Matheson suggests, had we gone through another U.S. drought that kept grain prices extremely high, it we would have resulted in large scale liquidations of hog inventories which in the long term would have been a blow for the grain industry as well.

Source: Farmscape