AgWired

Saskatchewan Agriculture and Food says a combination of factors will keep hog prices volatile with some strengthening as we move toward spring. Brad Marceniuk said while live hog prices have continued to fluctuate, they have improved since the beginning of February when higher U.S. slaughter numbers and higher volumes of chicken and pork in cold storage pushed prices down.

“The key factors are U.S. hog slaughter numbers, the demand for pork, U.S. meat in cold storage and the Canadian dollar,” said Marceniuk. “Lower hog slaughter numbers in the United States over the last few weeks have been positive on US hog prices. The demand for pork in the U.S. has been weakening over the last few months which have been negative for hog prices.”

With chicken in cold storage up 46 percent year over year and pork stocks up 23 percent from December, increased meat supplies have put pressure on prices. In Canada, the strengthening Canadian dollar has been negative for local prices and will continue to put downward pressure on hog prices if the dollar continues to get stronger compared to the US dollar.

Marceniuk notes February Statistics Canada figures show the total inventory of hogs in Canada as of January 1, 2006 fell slightly from one year earlier. Canadian production has levelled off, remaining relatively flat in 2005, with little growth expected in 2006 and shouldn’t be a major influencing factor on prices.

Siemens Says

American production of field peas and lentils has risen dramatically in response to government support under the Loan Deficiency Payment program. My colleague Kevin Hursh in Saskatoon, SA says back in 2002, the U.S. placed pulse crops under the LDP effectively guaranteeing producers a floor price. A report just released from Agriculture Canada shows the subsequent acreage and production increases.

On lentils, the seeded area in the U.S. has more than doubled since 2001 hitting 450,000 acres last year. Most of the growth has been in North Dakota and Montana. American lentil acreage could increase again this year, even though market prices are badly depressed. Saskatchewan produces far more lentils than the U.S., but it isn’t helpful to have a competitor that has returns guaranteed by a government program.

On peas, the U.S. acreage increase is even more dramatic. In 2001, the U.S. had only 227,000 acres of peas. Last year, the acreage hit 850,000 and this year could surpass 1.1 million.

According to Ag Canada, the Loan Deficiency Payment has sometimes accounted for more than a quarter of the total price received by producers for peas. Market prices for lentils and peas are very low, but when you get an extra dollar or two per bushel from the government, they’re suddenly much more attractive.

That’s how government programs in one country hurt producers in another country. Let’s say for a minute, the Canadian government would provide the same support. We don’t have to imagine very long how that would completely distort the marketplace

Siemens Says