Canada – Is the Party Over? Part 2

Bob Fraser – Sales & Service, Genesus Ontario

In my last commentary I discussed some of the potential challenges to being an export nation for pork, which Canada very much is and has been for a very long time. The USA is rapidly becoming a very significant one as well. So like Canada is learning the consequences to profitability if the meat doesn’t keep moving internationally. I also pondered if the basic good times of the last five years were going to keep rolling or begin to grind to halt.

Here is the numbers from two months ago (week ending April 13, 2018)

Hog profitability in the good, the bad and the ugly, had gone to the ugly. Here courtesy of Bob Hunsberger, Wallenstein Farm Supply. Projected profits two months ago for the next 12 months had fallen to $7.58 on average, but that is dependent on the present hog, corn and meal futures becoming reality.

The present producer profitability levels ($45.82) per pig average production and ($27.25) per pig excellent production will certainly end the party if the present summer futures (or better) don’t soon become reality.

The jungle telephone here in Ontario already suggests builders have had three proposed sow barns cancelled. Without a change in direction soon there will only be more.

So what has happened in two months?

Here courtesy of Bob Hunsberger, Wallenstein Farm Supply. Projected profits now for the next 12 months have risen from $7.58 on average to $10.35. Not massive but certainly in the right direction and I’m sure most producers would be happy with that on their year. The present producer profitability levels $13.29 per pig average production (close to a sixty dollar swing) and $34.30 per pig excellent production are certainly welcome but will have to last awhile to backfill the carnage of earlier months this year.

Are we out of the woods or just whistling pass the graveyard? My crystal ball isn’t that good. Well the recent run up in prices is welcome it seemed a little slow in coming and at least so far not overly robust given the expanded shackle space stateside. Some of these plants inability to move to second shift because of labour challenges is worrying in a time of full employment. Also presently the fourth quarter as usual looks ominous. However the crop here other than some challenges on the heavy soils in the far southwest Ontario look quite good. In our three crop rotation early corn is close to shielding in the rows, soybeans appear off to a good start and winter wheat is all headed out. So although not in the bin feedstuffs look to be ample. Recent trip to Des Moines for World Pork Expo the crops between Ontario and there, where the price is made, look fantastic at least from the interstate. Therefore margins don’t look to be pressured from the feed ingredient side. Just need to keep these hog prices rolling.

Perhaps as Jim has outlined in several of his commentaries if we focused a little more on what the pork tastes like than how lean we can make it, we might help our cause. Seems to be working not so bad for the beef guys…

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