In Alberta (and across Canada), most hog prices are calculated using a formula that ties Canadian prices to U.S. market data. The general structure looks like this:
Canadian Base Price = U.S. Base Price x Conversion Factor x Foreign Exchange (FX)
This formula ensures that Canadian producers’ prices reflect U.S. market trends, adjusted for weights, currency, and other regional differences.
U.S. Base Price
• Derived from USDA-reported data—either purchase data (e.g., LM_HG 204, 212) or slaughter data (e.g., LM_HG 201) albertapork.com.
• Purchase data: Based on hogs bought by packers on a given day, without detailed carcass characteristics.
• Slaughter data: Based on hogs slaughtered over a recent period and standardized by quality metrics like lean yield, feed conversion, weight, etc.
Conversion Factor
• Adjusts for differences in dressing percentages, yield standards, or grid systems between the U.S. and Canadian markets.
• The specific factor varies among processors and contracts (e.g., Olymel West contracts, Maple Leaf Signature contracts).
Foreign Exchange (FX)
• Converts the U.S. dollar-based base price into Canadian dollars.
• It’s a critical part of the formula—when the Canadian dollar strengthens (i.e., FX rate below 1.0), the Canadian price received by producers can decrease significantly
Below are examples of how different contracts compute base prices and add bonuses:
Olymel West 2021
Olymel West 2020 & 2019
Maple Leaf Signature Series (3, 4, 5)
Donald’s Fine Foods (DFF)
Transparency: Knowing how your contract’s base price is linked to U.S. metrics, FX, and conversion ensures clarity.
Negotiation: Understanding bonuses and how they’re structured (e.g., weights, certifications, timing, distance) helps optimize your contract and income.
Market Awareness: You can better anticipate pricing shifts due to exchange rates, U.S. market volatility, or changes in supply/demand dynamics.
