The profitability of hog producers in 2011 will depend on the price of feed according to the director of risk management with H@MS Marketing Service.

Feed costs are at the top of Tyler Fulton's list of the Top Five Issues Impacting Hog Profitability in 2011.

"With projections right now showing corn ending stocks at their lowest levels in 15 years, we could see some real volatility in prices," he says. "If we see any kind of weather scare that threatens next year's crop, that could simply have disastrous impacts on profitability for all hog producers."

He says producers in western Canada have an edge over their American counterparts.

"It's pretty obvious the feed cost advantage has moved in favour of the Canadian hog producer. Barley prices have lagged the rally that corn prices have had by a fairly large margin. That has resulted in lower costs and better profitability for Canadian producers," he says.

Fulton says the second most critical factor influencing profitability is the value of the loonie.

"The Canadian dollar seems to be settling in right around par value with the US dollar...when you look at our economy and our monetary policy over the last few years, we think it's likely going to stay where it is, if not climb up even higher against the US dollar, simply because of how we're performing," he explains.

Export volumes, domestic demand and hog supplies rank third through fifth in Fulton's Top Five.

"In general, the outlook for 2011 looks pretty promising, especially if we don't have any serious weather impacting feed costs," says Fulton.

~ Friday, January 7, 2010 ~