Farm Credit Canada released it's final Cattle and Hog update for 2023 which looks at the top economic trends and issues.
Senior Economist Leigh Anderson says for 2023 prices in the cattle sector have been and continue to be very strong due to a number of key factors.
"So the North American beef herd continues to shrink due to drought conditions the last several years. And just the time to rebuild a cattle herd takes quite a bit of time. Demand remains strong and this has pushed prices higher. "
The outlook shows that forecasted cattle prices are, on average, 33% higher year-over-year) and 50% higher than their five-year averages for each class as demand remains strong and supplies tighten.
Overall, he anticipates cattle prices and profitability will continue to be very strong in 2024.
Meantime, in the hog sector profitability has been a key challenge.
According to the report, projected feeder hog prices (Ontario and Manitoba) haven’t changed since August, and are still well under last year’s prices and the five-year averages. Isowean prices also continue to lag YoY and the five-year average.
'Isowean profitability turned negative in 2022, but 2023 has been particularly challenging with falling prices and increased expenses. Producers who have weathered the storm can look ahead to 2024 when margins are expected to take a jump in the right direction.
This year, we’re monitoring the North American drought’s impact on U.S. and Canadian cattle herds, red meat demand and input costs as the most significant forces on livestock profitability.'
Anderson says the hog sector has seen less export demand :
"This has resulted in hog prices being a little bit softer than we have seen. So the 2023 forecast on hog prices are lower than 2022 on average, relative to the five year average are still all right for that market hog. But on the feeder hogs a little bit softer there, just given the challenges that the hog sector is going through."
He notes 2024 is likely to look better for the pork sector adding it tends to go in cycles and right now we continue to work through over-supply issues.
Farm Credit Canada's 2023 Cattle and Hog Outlook Update is available here.