Manitoba’s weanling pig producers have been making steady, profitable sales to U.S. buyers in 2010.
But exports have stabilized at a much lower level than during the pre-country-of-origin labelling era, and the industry and a leading analyst say the current demand is not proof that the American market will remain open.
American producers’ buying methods show that they’re ready to walk away from Canadian suppliers at the first hint of trade trouble. Until Canada’s complaint about COOL to the World Trade Organization is settled, the market will be murky.
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“A lot of weanlings are getting dealt on the cash market,” said Manitoba Pork Council chair Karl Kynoch.
“Very few people can get a long-term contract.”
During the first six months of 2010, Manitoba producers sold about 1.5 million weanlings to American buyers. If that rate of sales continues to the end of the year, 2010 sales will be less than 2009’s 3.4 million.
And both are a big drop from the 4.5 million sold in 2007, when the economy was good and COOL was not in place.
However, weanling sales have fared better than slaughter hog sales. In 2007, 1.6 million hogs were shipped south from Manitoba for U.S. slaughter, but in 2009, that had fallen to about 450,000. For the first six months of 2010, slaughter hog sales had fallen further from that rate, with about 200,000 sold.
George Morris Centre analyst Kevin Grier said that slaughter hog exports are generally going to small, specialty packers. Today’s healthy weanling exports could be cramped if U.S. weanling supplies increase and demand declines.
“Canadian hogs are welcome now when U.S. supplies are tight. When the cycle turns, there will be a lack of demand,” said Grier in his Canadian Pork Market Review.
“While COOL is a non-issue on the surface, demand would be even better if every packer would take Canadian hogs.”
Grier noted that two large Manitoba weanling operations have recently gone back into production.
Kynoch said he didn’t expect the WTO to rule on COOL until June or July 2011. Until that issue is resolved, producers in Canada will not know how to view the market for weanlings.
“If we could get a ruling on COOL where we could get some confidence in the market going forward, we would probably see long-term business relationships beginning to reestablish,” said Kynoch.
