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Canada Pork Industry Overview, September 2004

by 5m Editor
1 September 2004, at 12:00am

By USDA Foreign Agricultural Service - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2004 report for Canada. A link to the full report is also provided. The full report include all the tabular data which we have omitted from this article.

Report Highlights

Canada’s cattle industry is formulating a made-in-Canada strategy to deal with a large surplus of cattle related to the U.S. border closure to Canadian live cattle exports following the discovery of BSE in an Alberta beef cow in May 2003. Canadian fed cattle prices are down 30-35% from their pre-BSE levels and prices for some classes of non-fed slaughter cattle are at distress levels. Since the R-Calf injunction of April 2004, hope that the U.S. border would soon be open has turned to despair among many industry participants.

Executive Summary

Canadian live hog exports to the United States in the first half of 2004 ran 33% above the level for the same period a year ago. However, the year-to-year rate of increase is expected to ease somewhat during the last half of 2004 because the highest rate of exports last year occurred during the July to December period. Still, total live hog exports to the U.S. in 2004 could exceed 8.5 million head.

On August 17, 2004 the United States Department of Commerce (DOC) preliminarily ruled that Canada’s subsidies for its hog industry are too small to justify the imposition of U.S. countervailing duties on hogs coming from Canada. The DOC’s preliminary determination in the anti-dumping case is scheduled for October 15, 2004.

Canada sold half of its pork production into international markets in 2003 via record exports of 975,000 metric tons, a 13% increase over the year earlier level. When the pork equivalent of its live hog exports is included, Canada exports about two-thirds of its total pork production.

Hog Inventory

The Canadian pig herd reached 14.8 million on July 1, 2004 a 1.4% increase over the year earlier level. The breeding herd was 2.6% higher than a year ago and 1.1% higher than the April 1 survey. Recent stronger prices for market hogs and record exports of live hogs to the United States are expected to result in continued breeding herd expansion during 2005. Post forecasts that the hog inventory will exceed 15.0 million head by mid-2005.

On August 17, 2004 the United States Department of Commerce (DOC) preliminarily ruled that Canada’s subsidies for its hog industry are too small to justify the imposition of U.S. countervailing duties on hogs coming from Canada. The DOC’s preliminary determination in the anti-dumping case is scheduled for October 15, 2004. In March, the DOC initiated the two separate investigations against live swine from Canada based on a petition by the U.S. hog industry.

Pork Production

Canadian pork production during 2004 is estimated at 1.9 million metric tons, the eighth successive year of record production. An additional moderate pork production gain of about 1.8% is forecast for 2005. As its live hog exports to the United States increase, Canada’s pork production increase potential is reduced. When live hog exports and pork exports are combined, Canada exports about two-thirds of its total pork production.

Consumption

Pork consumption suffered one of its worst performances in recent memory during 2003 falling almost 10% from the 2002 level. The market disruption caused by Canada’s BSE crisis and increased competition from other meats in relation to popular low carbohydrate diets resulted in weak pork disappearance.

Live Hog Exports

After reaching a record 7.4 million head in 2003, Canadian live hog exports (virtually all to the U.S.) are on pace to exceed that level during 2004. Through the first six months of 2004, live hog exports to the U.S. reached 4.2 million head, one-third greater than the 2003 pace for the same period. However, post predicts the year-to-year rate of increase will ease somewhat during the last half of 2004 because the highest rate of exports in 2003 occurred during the July to December period. On balance, post forecasts total hog exports to the U.S. during 2004 to fall within the 8.5- 8.7 million head range. For 2005, expectations of a higher hog inventory and uncertainty surrounding the timing of Canadian hog slaughter capacity expansion and of the level of Canadian pork exports, Canadian live hog exports could approach the 9.0 million head level.

Hog Prices

In early 2004, Canadian hog market prices returned to levels not seen since mid-2001. Attractive for finished hogs in the domestic market combined with brisk demand for Canadian feeder pigs in U.S. Midwest markets can be expected to boost profitability prospects for Canadian hog growers and encourage additional breeding herd expansion.

Pork Trade

Imports: On the strength of increased imports from the United States, Canadian pork imports during 2004 are expected to advance at least 10% above the year earlier level and reach 100,000 metric tons carcass weight equivalent. U.S. pork accounted for almost all Canadian pork imports in the first half of 2004 that was comprised of a wide range of fresh and chilled cuts and processed pork items. The outlook for 2005 Canadian imports is for no change.

Exports: Canada’s pork packing industry sold half of its throughput into international markets in 2003 via record exports of 975,000 metric tons or a 13% increase over the year earlier level. The top five markets for Canadian pork and their share of total in 2003 were the U.S. (56%), Japan (22%), Australia (4%), Mexico (4%), and Taiwan (2%).

Predictions that Canada would export more than 1.0 million metric tons of pork during 2004 may not be realized. In the first six months of the current year, total Canadian pork exports ran 2.3% below their level for the same period last year. Increased pork exports to both Japan and Mexico in the January to June period of 2004 failed to offset an almost 10% yearto- year decline in Canadian pork exports to the United States. On balance, total pork exports could slip 1.5%-2.0% to about 960,000 metric tons (carcass weight equivalent) from the 2003 level.

Policy - Trade Actions

The United States Department of Commerce (DOC) preliminarily ruled on August 17, 2004 that Canada’s subsidies for its hog industry are too small to justify the imposition of U.S. tariffs on hogs coming from Canada. In March, the DOC initiated two separate investigations against live swine from Canada based on a petition from the National Pork Producers Council. One investigation focuses on whether Canadian live swine are subsidized (the countervail case) while the second investigation alleges that Canadian live swine are sold into the U.S. at below fair value (the anti-dumping case). The DOC’s preliminary determination in the antidumping case is scheduled for October 15, 2004. The final determinations in both the countervail and the anti-dumping investigations have been aligned and are currently scheduled for December 28, 2004.

To view the full report, please click here (PDF)

Source: USDA Foreign Agricultural Service - September 2004