Russia, increasingly a close trading partner of China that started exporting pork to China in February, could also step up meat shipments.

China’s commerce ministry said on Monday it had opened an anti-dumping investigation into imported pork and its by-products from the EU, after the bloc imposed anti-subsidy duties on Chinese-made electric cars.

Any impact on EU exports will take time to emerge. China has said the investigation could last more than a year.

“Brazil, Argentina and the U.S. can export more pork and offal to China if exports from the European Union are restricted,” Pan Chenjun, a senior analyst at Rabobank in Hong Kong, said.

“If the anti-dumping tax is too high, than shipments from other origins such as the US, Brazil and Argentina will increase.”

The U.S. Meat Export Federation (USMEF) noted U.S. pork faces retaliatory duties of 25 per cent in China in response to steel and aluminum tariffs, however.

“It is unclear whether U.S. pork will still be at a tariff disadvantage compared to EU pork, as is the case today,” said Joe Schuele, vice president of communications for the USMEF.

Smithfield Foods, a unit of Hong Kong-listed WH Group ltd 0288.HK, is familiar with the impact of Chinese tariffs on U.S. pork and would welcome relief on that front, spokesman Jim Monroe said.

Anti-dumping duties could hit Europe hard as China’s pork purchases from Europe include parts such as feet, ears and offal that tend to only be used for pet food rather than human consumption in Europe.

Pan, however, said any impact on China’s market would be limited.

“We don’t see much impact on the local market in terms of supplies and prices if imports are restricted from the European Union. This is because China’s imports of pork and offal are just 5% of total consumption,” Pan said.

USMEF’s Schuele said there could be further opportunities for U.S. pork variety meats in China, including feet, stomachs, heads and neckbones.

Leading consumer and producer

In 2023, China imported $6 billion worth of pork, including offal, customs data showed.

It is the world’s leading pig producer and consumes around half the world’s pork.

Domestic hog prices had plummeted, but oversupply has eased this year as farmers slaughtered fewer pigs to boost the market.

One Asia-based trader who deals in animal feed said Brazil, China’s leading agricultural trading partner, stood to gain from any EU trade disruption.

The trader, who asked not to be named because they were not authorized to speak to the press, said Brazil was very competitive in terms of pricing and would be able to easily increase market share.

Russia also has potential for growth, and according to Yuri Kovalev, head of the country’s National Union of Pork Producers, it wants a ten per cent share of China’s pork imports within three to four years.

As of June 2, Russia’s pork shipments to China totalled 4,260 metric tons, but Sergey Dankvert, the head of Rosselkhoznadzor, Russian agricultural watchdog, said earlier this month Russia could export up to 100,000 tons of pork to China in 2024.

The head of Miratorg, one of Russia’s major pork suppliers, Viktor Linnik told an investment forum in St. Petersburg that the agricultural holding was ready to supply China with about 40,000 tons of pork by the end of the year.

One meat trader in Shanghai, who asked not to be named, said his company was in contact with Russian pork exporters.

—Additional reporting for Reuters by Olga Popova in Moscow, Karl Plume and Tom Polansek in Chicago and Beijing newsroom.

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Olymel, the agrifood arm of Quebec’s Sollio Cooperative Group, announced Friday it has served 80 employees with layoff notices at five sow units in Alberta and one in Saskatchewan.

The unit closures — Pinnacle 1 and 2, Dynacrest 1 and 2 and Smoky Sow/Dev in Alberta, and Olysky’s Kelsey unit in Saskatchewan — will reduce Olymel’s company-owned sow herd in Western Canada to 40,000 sows, down from 57,000, the company said.

That reduction is expected to translate to a net production cut of about 200,000 company-owned market hogs per year.

Olymel said the impact of that supply cut on operations at its hog slaughter plant at Red Deer, Alta. “will not be felt until 2024 at the earliest” and would depend partly on hog supply availability from independent producers.

The company didn’t give a hard date for the closures in its release Friday, but said the affected sow barns’ operations will be wound down “over the next several months” and the barns will stay closed “until market conditions improve.”

READ MORE: Meat industry hits hard times

“Over the past two years it is well documented that Olymel has experienced significant losses in the processing of fresh pork as a result of limited market access globally,” Olymel CEO Yanick Gervais said in Friday’s release.

“Now, coupled with stubbornly high feed costs, resulting in unprecedent losses in the hog sector, we have little choice but to retract and position ourselves for success in the future when conditions improve.”

Olymel’s fresh pork business in Western Canada took a hard hit in the company’s 2022 fiscal year, largely from “higher grain, labour and transportation costs, as well as the closure of the Chinese market in the first three quarters of the fiscal year for a second consecutive year.”

In Sollio’s fiscal 2022, its Olymel division alone booked a loss, before income taxes, of $445.7 million for 2022, following a $71.8 million loss for 2021.

Olymel had already been in deep cost-cutting mode for months. Last fall it cut dozens of administrative and management positions through attrition and layoffs, and since then has permanently closed three pork further-processing plants in Quebec.

After announcing it intended to reduce its total hog slaughter, Olymel last month reported it will permanently close its hog slaughter plant at Vallee-Jonction, Que. by Dec. 22.

Olymel and other packers operating in Quebec last month also announced a new supply deal with that province’s hog producer organization, les Eleveurs de porcs du Quebec.

To reduce the effects of the Vallee-Jonction plant’s closure on Quebec hog producers, EPQ said at the time, the new deal calls for Olymel specifically to cease buying market hogs from neighbouring Ontario.

Olymel’s remaining hog slaughter plants in Canada include the facility at Red Deer and its plants at Princeville, St-Esprit and Yamachiche, Que. — Glacier FarmMedia Network

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China’s 2020 pork output fell 3.3 per cent from a year earlier, to 41.13 million tonnes, after plunging 21 per cent in 2019, the National Bureau of Statistics said.

But some analysts said they had expected a much bigger fall in 2020 after African swine fever (ASF) ravaged China’s breeding stock in 2019. China’s stock had fallen by an estimated 60 per cent by mid-2019 after the disease hit China in mid-2018.

The reading is “quite high, higher than I expected. In November, we probably expected a 10-15 per cent decline,” said Pan Chenjun, senior analyst at Rabobank.

Xiao Lin, analyst at Shenzhen-based Win & Fun Investment, also said she had expected a bigger decline of between five and 10 per cent in 2020 output.

Policy support and incentives helped revive the sector by unleashing more than 200 billion yuan (C$39.3 billion) in investment.

China slaughtered 527.04 million hogs in 2020, the data showed, down 3.2 per cent from the same period a year earlier.

Output in the final quarter of 2020 jumped to 13 million tonnes, according to Reuters calculations based on the data. That is up 21 per cent from the 10.74 million tonnes produced in the same quarter a year ago and higher than 8.4 million tonnes in the third quarter.

Despite the jump in output, pork prices have risen significantly from the end of November, reaching 47 yuan (C$9.23) per kg last week, almost level with a year ago.

“That’s the signal that there’s a very big shortage,” said Pan, adding that demand had not increased significantly.

The data also showed China’s pig herd rose to 406.5 million head at the end of December, from 370.39 million at the end of September.

Beef and lamb output rose slightly in 2020, by 0.8 and one per cent respectively, the data showed, while poultry output grew by 5.5 per cent.

— Dominique Patton is an agriculture and commodities correspondent for Reuters in Beijing.

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“Our producers are losing a lot of money,” said Darcy Fitzgerald, executive director of Alberta Pork. “It truly is, right now, related to COVID-19. The price that we’re seeing that they’re being paid, is related to what is going on in the U.S. marketplace.

“We don’t really have a choice at this time to do anything different. We have our prices fixed with our largest competitor in the world, who happens to sit next door to us, and who we sell pigs and pork to.”

Canadian prices are based off American ones — and those have plunged because the pandemic has closed or slowed down packing plants and created a backlog of well over one million pigs (with that number expected to double by the end of the year).

“In Canada, it’s a different story,” said Fitzgerald. “We don’t have enough pigs for the packers that we have here. There has been no shortage of demand for our pigs, because there is a shortage of pigs going into those packing plants.”

The disconnect between demand and price has Alberta Pork, its sister boards in Western Canada and the Canadian Pork Council calling for a new pricing regime — one based on the cut-out (essentially the value of a processed pig carcass). After meeting with two big processors, Maple Leaf Foods and Donald’s Fine Foods, they won a measure of relief.

“Maple Leaf Foods announced it would add $20 per pig to all the pigs it purchased and that would go on for 13 weeks as long as all the producers extended their contracts by one more year,” said Fitzgerald.

Before the groups could meet with Olymel, that processor offered an extra $20 over the price it was paying before.

“They were all pretty similar, but the Olymel solution is a little longer term,” he said. “You can pick the contract you want to be on. Our hope is to sit down with Olymel and have that conversation.”

Despite those concessions, the gap between the two sides is large — hog producers in Western Canada are losing as much as $50 per animal. Normally, prices (which rise in summer) would be over $200 a pig, but producers are lucky if they get $150 or $160 per animal, said Fitzgerald.

“The prices that we’re seeing, these are not prices that happen at this time of year,” he said. “Demand is higher than it has been at any time in the world. But because we’re priced off the U.S., it’s a huge problem.”

If there aren’t significant changes to the pricing scheme, the hog industry will look a lot different a year from now, he said.

“Producers just can’t go on losing money. The outlook is really bad. But there’s no shortage in the demand for meat.”

Cattle prospects brighten

While the pork situation is dire, the beef industry’s prospects have improved greatly.

Two months ago, there was a backlog of 130,000 cows because of packing plant closures and slowdowns caused by COVID. That prompted the Canadian Cattlemen’s Association to predict the Canadian beef industry would lose half a billion dollars just on market-ready cattle by the end of June.

But the situation has changed considerably, said CCA president Bob Lowe.

“There’s a sense of optimism that there wasn’t two months ago. Things are working,” said Lowe, owner of Bear Trap Feeders near Nanton.

The big two processors, Cargill at High River and JBS at Brooks, are now back to full production.

“The cattle are moving,” said Lowe. “There’s a bit of a backlog to get through, but I think we’re getting through that.”

That has eased fears that prices for feeder cattle would crash during the fall run.

“What may cancel that out is that there wasn’t a lot of replacement cattle in March or April,” he said. “That may create a hole so we can get the ones that weren’t processed moved out in an orderly fashion.”

The cattle that are being processed now have been on feed for longer, so they are all bigger than normal.

“We’re selling cattle 50 or 100 pounds heavier than you’d expect them to be. That’s just a whole bunch more meat.”

However, demand for beef is still high, said Lowe.

Prices for cattle are low, but Lowe said that is based on the market situation.

“2020 was going to be the year to sell protein,” he said. “COVID-19 came along and decimated the world economy. The United States, which dominates our world markets, had record numbers of cattle in feedlots pre-COVID,” he said.

Those two factors — a battered global economy and record numbers of cattle on feed — have brought the prices down.

But while there is still some apprehension about the fall run — and the possibility the pandemic could cause a plant to shut down — the cattle industry is trying to stay positive.

“We’re still in a protein deficient world, and people still need protein,” said Lowe.

‘No relief’ for hog farmers

But that’s not helping hog producers at the moment.

A study commissioned by the Canadian Pork Council laid out the case for a pricing system based on cut-out (which is used in Quebec). And while discussions with the three major pork processors are set to continue, that report said it is “difficult to imagine that packers will voluntarily comply with a practice that may have the effect of reducing their margins.”

The other potential source of relief looks even less promising. Current government support programs aren’t working for hog producers, said Fitzgerald.

“There’s no ability for us to trigger the dollars in AgriStability,” he said. “There’s no relief from the government and in the pricing situation, our producers are losing a lot of money.”

Meanwhile, American hog producers have received at least $1.6 billion from Washington’s Coronavirus Food Assistance Program and are asking for billions more.

“Our competitors are getting help and coming into our country,” said Fitzgerald.

Government needs to recognize existing business risk management programs don’t work for hog sectors here and that something needs to change, he said.

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Still, first-quarter results will reflect lower cattle availability in the U.S. due to rains and a severe winter, which affected the company’s beef and pork plants, they said.

“The good news is that the price of chicken has already started to climb in the U.S.,” Guilherme Cavalcanti, chief financial officer, told analysts. This development should help JBS’ Pilgrim’s Pride division, which struggled in 2018.

Management also said that, while swine fever in China is another growth driver for the global company, Asian demand in general was already strong due to the strengthening of the local economies.

“Before speaking about rising demand due to swine fever, an increase of local income had already spurred the prospect for meat sales in the region, especially beef,” CEO Gilberto Tomazoni said.

JBS has plants certified to sell meat to China in four Brazilian states and is now developing direct relationships with distributors in the Asian country to by-pass intermediaries, management said.

The company said it may also re-direct some pork production from the United States to China if demand warrants.

JBS shares rose in late-morning trading after the results, which could also be bolstered by plans to raise prices at its Seara processed foods division in Brazil to pass-through the higher cost of feed.

JBS on Thursday reported fourth-quarter earnings that largely missed analysts’ estimates, reflecting challenges at its U.S. chicken and pork businesses that were partly offset by the strength of its beef businesses in Brazil and North America.

A sharp drop in financial expenses helped prop up results.

After selling assets and paying billions of dollars in debt, JBS said it was well positioned to grow organically, citing the possibility of reopening idle plants.

It said it also expects to conclude an internal corruption investigation in the first half of the year, which in theory paves the way for a share listing in the United States.

“JBS continues to pursue a capital structure that best reflects the company’s business,” Tomazoni said. The company gets 75 per cent of its sales from outside of Brazil, where it is currently listed.

— Reporting for Reuters by Ana Mano in Sao Paulo.

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China has reported 113 outbreaks of the contagious disease since last August, though farmers and industry insiders say several outbreaks are going unreported.

African swine fever, which does not harm humans, has a high mortality rate in pigs and has no vaccine or cure.

Chinese pork production will fall by up to 20 per cent in 2019, Oscar Tjakra, a director of food and agribusiness research at Rabobank, told a conference in the east of the country. China typically accounts for around half the world’s output of the meat.

That means local production this year of between 50 million and 51 million tonnes, Tjakra told Reuters on the sidelines of the event, down from last year’s 54 million to 55 million tonnes.

The U.S. agriculture department’s attache in Beijing has forecast pork production at 51.4 million tonnes this year, down five per cent from 2018, with imports seen at two million tonnes.

China’s pig herd declined by 15 per cent in 2018, according to Rabobank estimates, Tjakra said.

Pork production increased in the first three quarters of 2018, said Zhu Zengyong, associate professor at the Agricultural Information Institute of the Chinese Academy of Agricultural Sciences (CAAS), but declined significantly in the fourth quarter after the disease began spreading rapidly.

He cited official data issued by the statistics bureau, which shows the number of slaughtered hogs fell 1.2 per cent in 2018 to 693.8 million heads.

Pork output last year was 54 million tonnes, the bureau said.

The disease has totally disrupted the production plans of many major companies, added Zhu, with some halting expansion because of the disease.

Other speakers said the drop in output would hit feed demand hard.

China’s pig feed demand in the 2018-19 crop year that runs from October to September will fall 12 per cent and soymeal demand in the same period will drop 5.5 per cent, said Li Ning, general manager of commodity trader Living Water Trade (Shanghai) Co.

Li Qiang, chief consultant at Shanghai JC Intelligence Co. said he sees pig feed consumption down 25-30 per cent in 2019, and overall feed demand down from 12 to 15 per cent.

— Reporting for Reuters by Hallie Gu and Dominique Patton.

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Canada’s pork sales to China, after a sharp rise last year, exceeded those of the U.S. in the first quarter of 2017. That’s only happened a handful of times in two decades, according to U.S. and Canadian government data.

Rising affluence is driving China’s voracious appetite for pork, including parts of the pig — feet, elbows, innards — which command little value in most countries. At the same time, tightened environmental standards in China have forced farm closures and boosted demand for cheaper imports.

That’s a bonanza for Canadian farmers, who have almost completely removed the growth drug ractopamine from their pigs’ diet — largely because it is banned in China, which consumes half the world’s pork.

U.S. exports to China, by contrast, are limited because only about half of the nation’s herd has been weaned off the drug, according to U.S. hog producers, meat packers and animal feed dealers.

But major U.S.-based firms are now moving to produce more ractopamine-free hogs — including the three biggest pork producers: Smithfield Foods; Seaboard Foods, a division of Seaboard Corp.; and Triumph Foods, a hog farmer co-operative.

The ascension of Canada’s pork exports underscores the power of the gargantuan Chinese market to influence agricultural practices and profits in supplier countries worldwide.

As recently as 2013, annual U.S. pork sales to China, some 333,000 tonnes, more than doubled Canada’s shipments of 161,000 tonnes.

That’s the same year Canada’s hog industry started to remove ractopamine, best known as Eli Lilly product Paylean.

In the first quarter of this year, Canada shipped nearly 93,000 tonnes of pork to China, on pace to hit 372,000 tonnes annually. That eclipsed the 87,500 tonnes that the U.S. shipped, according to data from both governments.

The European Union, which has long banned ractopamine, is China’s top foreign pork supplier, sending 393,365 tonnes there in the first quarter.

Chinese authorities banned the use of ractopamine in livestock in 2002. They say meat raised with the drug can cause nausea and diarrhea in people and be life-threatening to sufferers of heart disease.

The U.S. Food and Drug Administration, however, did not see the same dangers when it approved ractopamine in 1999, concluding that it would “not have a significant impact on the human environment.”

The FDA’s stance has drawn some criticism, including a 2014 lawsuit by environmental groups alleging the agency has not fully examined the drug’s impact. The suit was later dismissed on technical grounds but is being appealed.

Hog farmer and rancher groups defend ractopamine use, saying it allows them to grow livestock more efficiently, with less feed, said Dave Warner, spokesman for the National Pork Producers Council. Canadian health authorities also allow consumption of pork from hogs raised with the drug.

Selling elbows online

The China market is so lucrative that Canada’s HyLife started selling pork online directly to Chinese consumers last year.

The small Manitoba processor hawks pig feet and elbows on e-commerce site JD.com Inc., a competitor of Alibaba Group Holding Ltd.

“They’re big online buyers,” said Claude Vielfaure, HyLife’s chief operating officer. “You try to move your pork all kinds of ways.”

Rising Chinese pork demand has driven up prices for byproducts including pigs’ feet, kidneys and livers.

Pigs feet sell for more than $2.50 per kilogram — about double their value two years ago, said Richard Davies, executive vice-president of sales and marketing at Olymel, one of Canada’s biggest pork packers.

Selling by-products can squeeze another $10 per pig from a carcass that otherwise earns packers about $180, said Ray Price, president of Alberta-based processor Sunterra Meats.

China is the biggest byproduct market, followed by Taiwan and Philippines.

Stewed pigs feet with white beans is a famous dish from Sichuan province, one of China’s culinary capitals, while blood sausage, made from intestines and cooked with pickled vegetables, is a traditional winter dish in the northeast.

Chinese consumers enjoy the strong flavor of offal — internal organs and entrails. In Beijing, stir-fried pig’s liver with vegetables is common on dinner tables and known for its nutritional value.

In all, China consumed 55 million tonnes of pork last year. Although that is the lowest total in four years, imports are rising fast because millions of China’s small-scale farmers have left the pork business in recent years because of falling prices and rising environmental standards.

The government forced thousands of farms to close because of severe water pollution.

China became Quebec-based Olymel’s biggest export market last year, vaulting over the U.S. and Japan. It plans to open a sales office there as early as next year.

“Just a tweak in that market can change the game for anyone in the world,” Davies said.

Getting pigs off drugs

U.S. pork producers have moved more slowly than their Canadian competitors to raise ractopamine-free pigs, primarily because the U.S. is the world’s third-biggest domestic market for pork.

Tyson Foods and Hormel Foods continue to process hogs that were fed ractopamine in part because they do not raise their own pigs.

Hormel’s hog supply “comes from more than 500 family farms,” a Hormel spokesman said, many of which use the growth drug.

U.S. firms can also send pork from ractopamine-fed hogs to Mexico and Japan, the top U.S. pork export markets.

But many U.S.-based suppliers are nonetheless scrambling to take advantage of Chinese demand for ractopamine-free pork.

Smithfield — the world’s biggest pork producer and a subsidiary of Hong Kong-listed WH Group — has raised most of its hogs without the drug for more than two years, a spokeswoman said. As the top exporter of pork to China, Smithfield firm shipped 300,000 tonnes there from the U.S. and Europe last year.

The second- and third-biggest U.S. pork producers — Seaboard and Triumph — are jointly opening a pork processing plant next month in Sioux City, Iowa, where nearly all hogs slaughtered will be ractopamine-free, according to local hog producers and animal feed mills.

Building dedicated ractopamine-free pork plants allows processors to limit risk of China rejecting shipments that contain trace amounts of the drug.

Seaboard declined to comment about ractopamine. Triumph did not respond to requests for comment.

The Cooperative Farmers Elevator in Ocheydan, Iowa, is constructing a new feed mill that by 2018 will produce only ractopamine-free animal feed.

“It was requested from some of the customers we deal with,” said Steve Peterson, the co-operative’s vice-president of feed. “The one that is pushing the hardest is Seaboard.”

U.S. hog producer Prestage Farms also is planning a new Iowa slaughterhouse for as many as 10,000 ractopamine-free hogs annually by 2018, president Ron Prestage told Reuters.

With the U.S. hogs in record supply, foreign demand is essential to profits, Prestage said.

“When we have plentiful hogs, as we do today, packers prefer not to have ractopamine,” Prestage said. “They want to be able to export as much product as they can.”

— Reporting for Reuters by Rod Nickel in Winnipeg, Michael Hirtzer in Chicago and Dominique Patton in Beijing.

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Affordable feed, solid summer grilling demand and respectable U.S. pork exports encouraged farmers to grow their herds. Several producers ramped up sow numbers in preparation for new hog packing plants coming online by 2018.

Based on Friday’s report, analysts believe domestic pork prices will remain low through 2017.

USDA’s report showed the U.S. hog herd as of September 1 at 102 per cent of the year-ago level, or 70.851 million head. It was the highest for any quarter since the government began tabulating quarterly data in 1988, according to Doane Advisory Services economist Dan Vaught.

Analysts, on average, expected 70 million head, or 101.2 per cent of the year-earlier herd.

The U.S. breeding herd was 101 per cent of the year-ago level, at 6.016 million head, up from 5.986 million last year.

The average trade forecast was 6.015 million or 100.5 per cent of the previous year.

The Sept. 1 supply of market-ready hogs for sale to packers was 103 per cent of a year earlier at 64.835 million head, an increase from 63.2 million last year. Analysts, on average, looked for a 1.3 per cent rise, or 64.001 million.

Some forecasters underestimated the impact of new and renovated plants coming on line within the next two years, said Linn Group analyst John Ginzel.

He said some of the report’s bigger-than-expected results could be traced to USDA’s upward revisions from its previous data published in June.

“What’s surprising is the 120 lbs. and heavier hog weight categories up four per cent, suggesting we’ve got a lot of pork ahead of us through the summer,” said Ginzel.

Dan Vaught said Friday’s report was “what everybody had feared” based on several categories that were at or above expectations.

Producers remained status quo with respect to their breeding herd as long as they could generate productivity through pigs saved per litter, said Vaught.

He pointed out that last quarter’s pigs per litter at 10.58 per head was the most ever of any quarter, beating the September/November record of 10.53 per head.

Analysts viewed Friday’s data as bearish for Chicago Mercantile Exchange lean hog futures on Monday, depending on how much of its was factored into the market’s three-cents/lb. limit-down settlement on Friday.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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Influencers outside of currency markets are driving current cash prices lower — and cash prices are relatively depressed, according to Tyler Fulton, director of risk management at Hams Marketing Services Co-op.

Fulton pegged this week’s Canadian prices at around $130-$140 per pig.

U.S. pork production is expected to see a one per cent increase in 2016, to a record 11.3 million tonnes, according to the U.S. Department of Agriculture’s (USDA) most recent Livestock and Poultry: World Markets and Trade report.

Global production of all types of meat, including chicken and beef is expected to expand in 2016, according to USDA — and that’s dragging on pork prices.

“There’s a tonne of meat protein that’s expected to be in the market in 2016,” Fulton said.

Strength in the U.S. dollar also makes exports more difficult for U.S. producers, contributing to ballooning supplies.

“In terms of the cash market, in terms of what producers are being paid, for example, this week, it’s quite depressed,” Fulton said.

However, prices offered in the forward cash market — which are based off of the futures market — are being driven higher by the weak loonie.

By summer, Canadian producers could be able to secure prices at about $200 per pig, Fulton said.

“I would say that’s a big opportunity for producers to take advantage of, given the concerns that there are in the trends going forward.”

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Brad Marceniuk, a provincial livestock development specialist in Saskatoon, said he expects prices to stabilize in the next couple of weeks as slaughter numbers come back to Earth.

“It really impacts the price, because the cash market price in the U.S. determines what our cash price is here,” he said.

Saskatchewan Signature No. 3 cash slaughter weight hog prices declined C$2.89 per 100 kg, to average $124.17/ckg, for the week ended Saturday (Nov. 21).

So far this year, the number of Canadian hogs slaughtered was estimated at 18.44 million head, up 2.5 per cent from the same time in 2014.

The U.S. has been even busier. The weekly pork production of 510.5 million lbs. established a new weekly record, according to Marceniuk.

“So when (the U.S.) have record numbers of production and slaughter numbers they see numbers typically fall,” which in turn reflects onto Canadian prices, he said, noting hog exports in North America typically flow north to south.

“It’s not vice-versa; they typically pay higher prices for hogs and our price is whatever their price is less a bit of a basis. It doesn’t move back and forth.”

Marceniuk attributed some of the rush to the holiday season in the U.S. The low Canadian dollar, relative to its U.S. counterpart also helps increase interest.

Once Canadian prices stabilize, he said, they should move up slowly.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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