It was an up-and-down year for Canada’s pork industry in 2013, as producers were struggling to break even in the first half of the year before posting a strong second half heading into 2014.
“I think most producers in December 2012 were looking ahead at 2013 and thinking that it was going to be a fairly profitable year,” said Perry Mohr, general manager for Hams Marketing Services in Headingley, Man. “I think it was February or March that both Russia and China banned U.S. pork that was fed ractopamine and that put a big damper on hog prices from that point until the middle of June, early July. Most producers were lucky if they were breaking even.”
He added that fundamental factors started turning in the producers’ favour midway through 2013, leading to strong pork prices for the rest of the year. “I think (U.S. exports) started to pick up to China again and Mexico was importing a lot of pork,” Mohr said. “Probably the single biggest factor was that domestic consumption was starting to increase. That was driven largely by record-high beef prices.”
Declines seen in grain prices and the value of the Canadian dollar also had big impacts on the strong pork prices through the fourth quarter of the year, which is historically when prices decline.
“Feed prices did decrease exponentially, but most of that decrease occurred in the fourth quarter,” Mohr said. “The Canadian dollar really started to help us mostly in the last half of the year, going from par to US93 and 94 cents. That adds $6, $7 or $8 per pig to the equation, so that goes directly to the revenue side.”
Despite the strong second half of the year, Mohr said that producers probably didn’t make a lot of money in 2013.
“Overall, if we stand here today, look back and reflect on the last half of the year, we’d say it was a pretty good year,” he said. “Did they make a lot of money? Probably not.”
Once the Comprehensive Economic and Trade Agreement (CETA), a free trade agreement between Canada and the European Union, is finalized, Mohr said it will have a positive impact on the industry in the long term.
“I can argue that it had no impact on hog prices in 2013, and it may not have very much impact on hog prices in 2014, but it is certainly a positive development when a market opens up to you that hasn’t been a very big market traditionally.”
Looking at 2014, Mohr noted the outlook is as good as it’s been in a long time for the industry.
“It’s probably as positive of an outlook as we’ve had in the last 10 years,” he said. “If we look at it from a cost perspective, bins are bursting and there’s grain laying all over Western Canada on the ground. From a price perspective, if you look at futures today, with the exception of the next month or so, things look profitable.”