Winnipeg - Canada's farmers hoping to survive devastatingly low hog prices will benefit less than U.S. producers when an upswing in the market kicks in next year, a Canadian market analyst said on Thursday.
Canadian hog producers have been forced to seek government help because of the downturn which began earlier this year and which has also broadsided hog farmers in the United States.
“If you look at a week-to-week comparison of hogs of the same quality in Minnesota versus Manitoba, or in Indiana versus Ontario, our prices are worse than their prices,” said Larry Martin, with Canada's George Morris Centre policy group.
Martin, speaking at an agriculture conference in the hog-producing province of Manitoba, forecast hog prices would go up in about mid-1999 once demand from Asian countries began returning and efforts by U.S. producers to reduce supplies took effect.
“We'll probably see pork (supply) declines in the second half of next year,” he said.
An oversupply of hogs in the United States, resulting from the closure of hog processing plants, has been blamed as a major reasons for the sharp drop in prices.
Manitoba's hog prices are based on hog prices in the U.S., which also has a sharply stronger dollar than Canada's currency.
“The U.S. is one of our largest markets. If the U.S. market crashes then our market crashes, if it goes up then ours goes up,” said Janet Honey, head of market analysis at Manitoba Agriculture.
Producers and farm groups have said the low prices, combined with low values for other agricultural commodities, have forced a farm income crisis not seen since the Great Depression in the 1930s.
Honey said Canadian producers, who she said were currently losing $60-70 per hog, would see modest profits probably around spring time next year.
“We're not going to see the wonderful prices in 1999 like in early 1997,” she said. “We'll see small profits returned to hog producers.”
The U.S. Department of Agriculture said the top price on Thursday for hogs sold at country points in the key Iowa/southern Minnesota area was $20.00 per hundredweight (cwt), down from $31.00 in September and well below the year-ago price of $41.50 to $44.50.
“We have to start seeing more exports go off to Asia and see lower numbers produced in North America,” said Martin.
Canada was expected to slaughter about 16 million hogs this year compared to about the same amount in 1998.
Demand fell off with the economic downturns in Asian countries and in Russia, while domestic demand has failed to take off.
“We are used to having cycles in hog markets but not like the downturn we see now,” said Edouard Asnong, president of the Canadian Pork Council.
“There will be an end for sure, but I hope that producers are still in business by the time that the crisis is over,” Asnong told Reuters in a telephone interview.
He said the council had asked packing plants in Canada to kill as many hogs as possible, and would join other agricultural groups in asking lenders to extend credit repayment periods for farmers penalty-free.
Asnong said stories were few of hog producers culling animals that they could no longer afford to feed.
Canada's Agriculture Minister Lyle Vanclief said this week that Canada was expected to announce some sort of aid package to all agricultural producers by Christmas.
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