It’s grilling season and feed prices are down. Now that we’ve got the two positives out of the way, it’s time to talk tough realities for the hog market.
Christine McCracken, executive director animal protein for Rabobank, says cooler weather in the hog-producing areas of the U.S. has meant heavier hogs coming to market. Combine that with softer demand and the overall trend is a downward pull on hog prices, she says.
Although tourism and travel is up, McCracken says the demand for pork for the food service industry is not, which could be an indication of food service trying to keep margins up.
The global demand picture isn’t all bad, however. Exports to Japan have been negatively impacted by currency exchanges, but there is a growing need for pork into Europe, as hog production there has been in steady decline.
Germany especially has pulled back its pork production in the last two to three years, as inflation and regulatory pressure has prompted many to exit the industry, she says. African swine fever has had an impact, too, but not a large-scale one. At the same time, consumption trends of pork by Germans is also on the decline.
And what about Maple Leaf spinning off its pork production business? McCracken says the pork business is a tough one, and it’s definitely cyclical, and that can be a real challenge for publicly-traded company that’s committed to delivering profit stability to shareholders. That could have played a role, she says, as could the different type of demand and management a hog business requires versus a packaged food for retail business.
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