Statistics Canada had some good news for U.S. hog producers last week. The Canadian swineherd is not growing. Their latest inventory survey found 1.6 million sows and bred gilts in Canada on April 1, 0.3% fewer than on that date in 2005.
"All of the breeding herd reduction occurred in Ontario and Quebec," says Steve Meyer, Paragon Economics, Adel, Iowa. "The report also reflects the impact of porcine circovirus associated disease (PCVAD - the new name for the disease formerly know as PMWS) and the now-lifted antidumping duty on imported corn."
Market hog inventory tightens
"The Canadian market hog inventory was down 2.4% at the start of April," says Ron Plain, University of Missouri economist. "The smaller swine herd reflects higher pig exports to the U.S., lower hog prices in Canada, the PCVAD problems and concern about the future profitability of Canadian hog production."
Meyer notes that the number of pigs weighing 20 kg or less was 5.7% smaller in Canada this April with inventories of those lightweight pigs down nearly 9% in Ontario and 8.8% in Manitoba. Canadian feeder pig exports during February and March (the time in which these 20kg pigs on April would have been born) exceeded last year by nearly 175,000 head. Had those pigs stayed in Canada, the lightweight inventories would have been only 1.9% lower.
Currency exchange rates count
The U.S. and Canadian hog markets are closely linked. Therefore Canadian hog prices track with U.S. hog prices.
"However, because of exchange rate fluctuations, prices don't always change by the same amount," notes Plain. "For example, U.S. barrow and gilt prices in 2005 averaged 11.9% higher than in 2000. Manitoba hog prices were 9.1% lower in 2005 than in 2000."
First farrowing cut in ten years
Canada farrowed 3.4544 million litters in 2005, which was 1.4% fewer than in 2004. This was the first year-over-year decline in Canadian farrowings since 1996.
"It looks like 2006 farrowings may be near last year's number," notes Plain. "Litters farrowed in Canada were down 1.2% during January-March compared to the first quarter of 2005. Farrowing intentions for the second quarter are for 1.2% more litters than in April-June 2005."
Most of the growth in North American hog production during the past decade occurred in Canada. The 2004 Canadian pig crop was 15.22 million head (85%) larger than the 1994 crop. During the same years the U.S. pig crop increased from 101.479 million head to 102.781 million head. The 2005 Canadian pig crop was 527,300 head smaller than the 2004 pig crop.
North American expansion proceeds slowly
"High construction costs and the permitting process are slowing expansion of the U.S. swine herd," says Plain. "Little or no growth in the Canadian herd means that the expansion phase of the hog cycle may be much less devastating to prices this time around."
The top five Canadian providences in hog production are Quebec, Ontario, Manitoba, Alberta and Saskatchewan. The Canadian sow herd is nearly 50% larger than the Iowa sow herd. But Canada's market hog inventory is 15% smaller than Iowa's. Roughly a quarter of the Canadian pig crop is exported to the U.S. as feeder pigs or slaughter hogs.