Agriculture and Agri-Food Canada reports the lower Canadian dollar is helping cushion Canadian pork producers from reduced international pork prices resulting from higher supplies.
Agriculture and Agri-Food Canada released its 2016 Canadian Agricultural Outlook last week.
Rodney Meyer, the Director of the Farm Economic Analysis Division, reports farm cash receipts in the cattle industry are expected to increase by 14 percent in 2015 before declining slightly in 2016 and the hog sector is expected to experience a 20 percent decline in farm cash receipts in 2015 as prices soften in response to larger world supplies, principally in the United States, and for 2016 we expect farm cash receipts for Canadian hog producers to drop by a further 1 percent.
The hog industry benefited quite substantially over the last few years from lower supplies in the U.S. caused by the PED virus. Prices were very strong in 2014 so in 2015 we’re seeing lower prices and lower farm cash receipts as higher supplies come online in the U.S. and then another slight decline of about 1percent in 2016.
Feeding margins actually remain reasonably good. We’ve got historical livestock to feed grain price ratios so what we’re seeing in 2015 and 2016 is a livestock to feed grain price ratio that’s a little bit lower than average but not abnormally low.
The dollar is having a very positive impact on the pork industry. Prices in U.S. dollars are down considerably more than in Canadian dollars so certainly the decline in the Canadian dollar is cushioning the impact of lower world prices.
Meyer says producers in the U.S. have largely recovered from the PEDV epidemic which significantly constrained supplies during 2013 and 2014.
He says breeding herds in the U.S. herds have been rebuilt and we expect to see continued effects of larger U.S. supplies over the next year.
