Canada Hopes Hog Plant Opening Will Slow Exports

By Roberta Rampton

Reuters

Thu Oct 9, 2003

WINNIPEG, Manitoba (Reuters) - The recent reopening of a Manitoba hog slaughter plant should help slow Canadian exports of slaughter hogs to the United States, analysts said on Thursday.   Springhill Farms started killing and cutting about 10,000 hogs per week when it reopened on Sept. 29, general manager Bill Teichroew told Reuters.

The plant cut production in June, then shut down in late July because of poor margins, which have since improved, Teichroew said.

"Based on what we can read about the future price of the cuts and the future price of the raw material, we're hopeful this was a one-time shot and I hope we can get over it," Teichroew said.

Other Canadian plants may ramp up production too, analysts said.

"Packers are starting to have an increased appetite for killing hogs," said Kevin Grier, a meat market analyst at the George Morris Centre in Guelph, Ontario.

Springhill's shutdown helped boost exports of slaughter hogs this summer, along with the closure of a small Ontario plant and slowdowns throughout the Canadian hog processing sector because of slim margins, Grier said.

"Packers have had a very poor 2003, as have producers," he said.

Federal statistics show Canada exported a total of 1.6 million slaughter hogs by the last week of September, up 13 percent from the 2002 pace.

In September, Canada exported an average of 62,000 market hogs per week to the United States, accounting for about 3 percent of U.S. weekly slaughter numbers.

But the Canadian exports were enough to "take the edge off" U.S. hog prices, Grier said.

U.S. farmers, who have struggled with poor margins for the past two years, have taken note of the added exports, said Perry Mohr, chief executive of a farmer-owned hog marketing group in Manitoba.

Meanwhile, Canadian cattle exports came to an abrupt halt on May 20, when Canada confirmed a single case of mad cow disease. U.S. beef futures have since soared.

"The American beef producer has seen what happens when you ban Canadian beef from coming in: you get record high prices," Mohr said.

"There is some concern that the Americans could look at some kind of trade action to restrict the number of hogs from Canada going into the U.S., and that of course would have a big negative impact on Canadian prices and boost U.S. pork prices," he said.

Canadian pork producers are not subsidized, Mohr said, and farmers had to sell their hogs somewhere when Canadian packers slowed their pace.

The ban on Canadian cattle and beef exports because of the case of mad cow disease has hurt the domestic market for other types of meat, analysts said.

"We can only eat so much protein, and everybody's freezers across Canada are stuffed with ground beef," Grier said.

Reuters Limited.