This year’s hog prices probably won’t make producers rich, but they should be better than they were last year, says a Maple Leaf Foods vice-president.
“I think we can paint a fairly bullish picture,” John Carney told the Grain World market outlook conference in Winnipeg.
He said U.S. poultry expansion is slowing, which limits competition from a key rival.
As well, hog farmers in the United States have begun shipping hogs to market at lighter weights in response to expensive feedgrains.
On average, hogs are heading to slaughter 3.5 pounds lighter than a year ago.
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“Less pork means higher prices,” Carney said.
The downside for farmers is that higher feedgrain costs will offset the revenue from higher hog prices.
Carney said he was relieved to see worldwide demand for pork continuing to grow.
“It’s showing no signs of letting up.”
In recent years, exports of U.S. pork have caught up to and surpassed Canadian exports. Now offshore markets are important to both sides of the border, Carney said.
Japan, which is a premium price market, has seen its production decline by more than two percent while its consumption has increased by more than 13 percent.
However in China, production growth outpaced demand growth, so there has been little increase in its desire for imports. Carney thinks that will change, but not quickly.
Even if China wants to import more pork for its gigantic population, getting it from ships to consumers will be a problem.
“One of the big challenges in China is distribution and refrigeration,” Carney said.
“It’s proving to be a very difficult market to break into.”
However, if the present trend of urbanization and industrialization continues, China should eventually become an excellent market.
The country now consumes 52 million tonnes of pork per year, or more than 25 times what Canada produces and more than five times what the U.S. produces.
For now, Canada’s main pork export to China will continue to be offal, which is a low value but necessary pork export.
“We have a whole pig to sell,” Carney said.
His generally positive outlook may be a relief for Canadian producers, who have not been enjoying great times. U.S. producers have made far more money than their Canadian neighbours in the past few years.
“It’s been an incredible period of prosperity (for U.S. producers),” Carney said.
The sudden surge of the Canadian dollar in recent years drastically reduced the revenue Canadian producers saw and left companies such as Maple Leaf with major losses.
