If April’s run-up in pork prices was any indication, continuous volatility in the global hog market could run up retail prices here in Canada in the coming months.
Kevin Grier, of Kevin Grier Market Analysis and Consulting, says that African swine fever (ASF), the tenuous U.S./China trade truce, and soybean and hog export swings are all playing out in the hog market now, and will likely continue to have a large impact for the next year or more.
There are rumblings and rumours of pork shortages for Canada, but Grier says that’s unlikely to happen, even as Chinese-owned Smithfield Foods in the U.S., has made the commitment not to short the domestic customer. That said, higher prices pull supply and there may be some other countries that end up short on pork.
As we saw in April, some Canadian customers (mainly processors) were shorted on supply — and a few grocers did end up short too. That translated to higher retail prices for consumers, according to Grier.
While China, continues to grapple with the devastating impacts of ASF domestically, the country has seen an 80 per cent retail price increase year-over-year — which Grier doesn’t think we’ll see here at home. That’s partially due to the major increase in U.S. hog production and slaughter capacity since 2016. The U.S. hog producer definitely wants and needs to see exports increase, regardless of where the pork ends up, and that seems to be the plan, should this latest trade truce actually come to fruition.
Back in Canada, 2019 has been very volatile, of course, but with some good gains and profitability earlier in the year, Grier thinks, on-average, 2019 will end up as a decent year for hog producers. Marketing hogs right now does sting, at a loss of about $25-$30/animal, but at least some of it is due to a seasonal low.
Listen below for the full market discussion with Kevin Grier, below: