Strong U.S. Dollar Benefits Canadian Pork Producers

Jan 04, 2016

By Bruce Cochrane.

The vice-president pork analysis with EMI Analytics expects the strong U.S. dollar to continue to benefit Canadian pork producers throughout 2016.

The value of the U.S. dollar has is currently running at approximately $1.39 Canadian.

Dr. Steve Meyer, the vice-president pork analysis with EMI Analytics, says, despite lower live hog prices, the strength of the U.S. dollar compared to its Canadian counterpart is beneficial for Canada's pork producers.

Clip-Dr. Steve Meyer-EMI Analytics:
The U.S. dollar remains strong relative to recent history.
It's the strongest it's been since, I believe, 2002 and that change really occurred from July of 2014 through March of 2015 and we've been relatively stable since then.

I don't see the dollar weakening anytime soon and so that's a good thing for Canadian producers whether their hogs come to the U.S. or not because your prices are our prices adjusted for the exchange rate so, when the dollar strengthens, that makes about half of Canada's cost of production go up, mainly feedgrains and 100 percent of Canadian producers' revenue go up because of that change in the value of the dollar.

If I can get something that drives up the value of all of my revenue and only half of my costs I'll take that any day and so this has been a beneficiary to Canadian producers.

Now, unfortunately, you're still subject to our lower prices of recent months but not nearly as much as U.S. producers are and so I think this has been another benefit to Canadian producers.

These two factors both are working in favor of Canada's producers over the next year or so I believe.

I could make the argument that they deserve it, because they went through the opposite for some time on Country of Origin Labelling.

Dr. Meyer notes Canada has not grown its breeding herd much over the last several years following the big sell off when the Canadian dollar strengthened back in the 2000s and suggests the current weakness of the Canadian dollar could provide some incentive for renewed expansion of Canadian hog production.

source: farmscape

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