CNS Canada –– Canadian pork producers should see higher returns for their product in the spring of 2018, but whether those prices last may determine how successful Canada is at tapping new markets.
According to U.S. Department of Agriculture supply estimates, weekly U.S. hog slaughter numbers over the past two months have averaged 2.369 million head, up 3.2 per cent from the same time last year.
That increase is expected to continue, following the launch of two new massive operations in Michigan and Iowa last fall.
Read Also
CBOT Weekly: Additional soybean purchases strengthen U.S. soy
There were good gains for the Chicago soy complex during the week ended Feb. 4, due to positive news that Wednesday.
“That increased hog slaughter has helped ease the higher hog supply,” said Brad Marceniuk, a provincial livestock economist in Saskatoon.
Normally, higher volumes of a product bring lower prices, but strong U.S. exports, and by extension Canada, have helped keep prices strong.
Weekly Saskatchewan Signature No. 5 base slaughter cash hog prices now average $160.45 per 100 kg. That was up $1.12/ckg over the previous week.
New export markets will be sorely needed, Marceniuk said, as slaughter capacity in the U.S. rises.
“We won’t eat more (pork) in North America necessarily but we’re going to have to export more,” he said.
China, Mexico and Japan are three of Canada’s largest customers apart from the U.S., he added, and additional markets are being sought.
That’s why stakeholders in the Canadian pork industry are monitoring negotiations over the future of the North American Free Trade Agreement very closely.
“We do send over five million hogs there annually,” he explained, and roughly a third of Canadian pork is shipped there as well.
Feed costs are another factor pressuring the Canadian market. The price of corn in the U.S. has stayed roughly the same since last year, Marceniuk said, but Canadian barley prices rose over that time.
“So that would be a feed negative for Western Canada,” he said.
Looking at the futures market on the Chicago Mercantile Exchange, he said, the industry expects to see stronger pork prices in the coming months.
He expects cash prices in Canada to be in the $170-$180/ckg range by the spring and summer.
However, he stressed that Canada will be competing with the U.S. for new export markets in 2018, so it will have to come up with additional outlets waiting to take its product for prices to retain their strength.
— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.
