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AHDB Pork Country Reports


15 January 2013

BPEX / AHDB Country Reports - Canada January 2013BPEX / AHDB Country Reports - Canada January 2013

Canada is the leading competitor for the EU and US on pork export markets. Although its pig meat production is lower than countries such as Brazil, Russia and Vietnam, Canada’s relatively small population means that it has a sizeable exportable surplus. Canada is also a major exporter of live pigs, mostly in the form of weaners being sent to finishers in the US.
BPEX / AHDB Country Reports
AHDB

Pig Numbers

Results published by Statistics Canada show growth in the Canadian pig herd in the year to 1 July. At 12.9 million head, there were one per cent more pigs on farms compared with a year earlier. This follows a similar increase the previous year, which ended five years of decline. These trends reflect developments in the first half of the year but since then feed prices have risen rapidly, meaning that many producers face substantial losses. The precarious position of the Canadian industry was demonstrated by the news that two of the four largest pig producers filed for receivership over the summer.

Canadian Hog Inventory, 1 July

Source: Statistics Canada

Production

During the first half of 2012, Canadian pig slaughterings totalled 10.5 million head, marginally higher than during the same period of 2011. Slaughterings have been broadly stable in recent years having fallen somewhat over the previous decade. This stability has come because of fewer live pigs being exported to the US, offsetting the reduction in the Canadian breeding herd, although this trade has now stabilised.

Data from Agriculture and Agri-Food Canada suggest that slaughterings were slightly below year earlier levels in the third quarter, largely as a result of a four per cent decline in July. By September, throughputs were back above their level in September 2011.

Trade

The Canadian pork export trade continued to grow in the first three quarters of this year, up by four per cent, as a result of higher export demand even though pig slaughterings over the same period were little changed year on year. This partly reflected good US demand, given high prices there, with Canadian pork exports to the US also up four per cent. However of more significance, shipments to Russia increased by more than half. Pork production in Russia has picked up year on year but remains well below domestic demand and Canada has been a major beneficiary of the ongoing restrictions on Brazilian trade with Russia.

January – September

Source: Statistics Canada, GTIS

Canadian trade with Asian countries varied as Japan and South Korea recovered from earlier disruptions in their production sector and hence reduced their imports of Canadian pork by five per cent and 34 per cent respectively. Demand-led growth meant that exports to China increased by more than ten per cent. The average export price in Canadian dollars was little changed year on year but was down five per cent in US dollars given some fall in the Canadian currency so far this year, making Canadian product on export markets more competitive compared with its neighbour.

Canadian imports, which mainly consist of chilled product from the United States, were up 11 per cent. This increase compensated for the rise in Canadian exports, given stable consumer demand. In addition, other small suppliers including Chile, Germany and the Netherlands also shipped more to Canada during the first nine months compared with a year earlier. Exports of live pigs remained relatively stable during the first three quarters of the year, with almost all of the 4.3 million pigs going to the US, most being weaners sent to be finished in the US.

Prices

Compared with the steady increase in prices in the first half of last year, there have been larger variations in prices so far in 2012. Between January and March, pig prices were firm before they fell by around C$10 in April and May. However, prices increased during June and July, following the trend in US prices, hitting C$206.25 per 100 kg in July, the second highest monthly figure on record. However, rising feed costs meant that North American producers started to market pigs earlier and in larger numbers to mitigate higher production costs. This increased supply led to a slump in prices during August and, particularly, September. Again, the Canadian price followed the trend of the US price during this period.

Canadian Hog Prices

Source: UDSA

Outlook

Pig meat production in the first half of this year was encouraged by an improvement in pig numbers and higher demand from foreign markets, since almost two thirds of the Canadian pork production was destined for export. However, the recent feed crisis combined with lower US demand for feeder pigs is likely to jeopardise confidence in the Canadian pig industry. Some small producers have already started to liquidate their pig holdings due to financial difficulties, while two of the four largest producers have entered receivership.

The effect of the feed crisis is likely to become more evident in 2013 as the sow herd size is predicted to fall by over two per cent. As a direct consequence of the reduction in pig numbers, slaughterings are likely to fall by around two per cent next year, with a smaller fall in the second half of this year. This will lead to a similar fall in pig meat production assuming that carcase weights remain stable.

The export market has performed well so far this year but with lower domestic production, exports are likely to decline later in the year and next year. Imports are also likely to fall by a small amount. This means that the amount of pork available for consumption is expected to remain relatively stable.

Canadian Pig Meat Production and Consumption Forecasts

January 2013

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