Chicago - Labor strikes at two Canadian pork plants since last weekend are increasing the flow of live hogs to the United States and adding pressure to U.S. cash hog prices at a time marketings are already robust.
"It could be a little bit negative because at this time of year packers are killing all the hogs they want," said Ron Plain, agricultural economist with the University of Missouri.
"I would say a $1.00 would be a good ballpark estimate per hundredweight of an impact if it drags on for awhile," he said.
Maple Leaf Foods Inc (Toronto:MFI.TO - news), Canada's largest food processor, saw workers at its plant in Edmonton, Alberta, walk out on Monday in sympathy with striking Burlington, Ontario, workers who walked out on Saturday. Combined weekly capacity at the plants was estimated at 60,500 hogs.
"It wouldn't surprise me if there were another 15,000 hogs a week going down to the States," Canada Pork Council executive director Martin Rice said on Tuesday.
Chuck Levitt, livestock analyst with Alaron Trading Corp. in Chicago, said the U.S. hog industry was already in a "supply sensitive" situation at the moment.
"We're getting a lot of hogs anyway. This is the time of year we usually get a seasonal peak in marketings and that's probably going to continue for the next two to four weeks or so," Levitt said. "The net result is a $1.00 or $2.00 move on the downside," Levitt said.
Midwest livestock dealers estimate that about 3,000 to 4,000 extra hogs have been moving into packing plants in southern Michigan and northern Indiana since the walkouts started.
IBP Inc's (NYSE:IBP - news) plant in Logansport, which has been operating below capacity, is expected to start receiving extra hogs from Canada.
IBP spokesman Gary Mickelson told Reuters the company would be taking hogs from Canada "within the week" but would not confirm the plant's location.
Additional hogs from western Canada were also being trucked to the John Morrell and Co plant in Sioux Falls, South Dakota. Morrell is owned by Smithfield Foods Inc (Nasdaq:SFDS - news).
"I don't know how many are coming in, but I can say that it's not going to be a problem and that whatever comes in will be sold," said a spokesman for Smithfield.
Livestock traders said the Morrell plant has a daily capacity near 15,000 head and could easily expand operations from eight-hour to ten-hour shifts to accommodate extra hogs.
"It all depends how many hogs come down, but that plant can kill an amazing number of animals," one South Dakota dealer said, adding that plant officials would probably expand daily hours rather than go to Saturday oprations.
"They don't like to go to Saturdays, it gets expensive to pay for the overtime," he said.
A typical livestock tractor trailer can carry 50,000 lbs of hogs, about 200 head if they weigh an average of 250 lbs.
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