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US Domestic Pork Demand to Determine Hog Industry Profitability this Winter

27 October 2015, at 12:00am

US - The director of risk management with [email protected] Marketing Services says demand pork is likely to be the primary factor that will determine profitability in the hog industry heading into this winter, writes Bruce Cochrane.

Over the past couple of months the US hog slaughter has been running 7 to 9 per cent higher than year ago levels reducing returns but abundant supplies of corn and soybeans combined with moderate demand have reduced feed costs.

Tyler Fulton, the director of risk management with [email protected] Marketing Services, says the bigger questions relate to the domestic demand for pork.

Tyler [email protected] Marketing Services:

I'd says the competing meats are one of the primary driving factors to the market today.

Over the course of the last 5 months chicken has dropped in the US and all of these numbers are relating to the US

Chicken prices have dropped about 30 per cent.

Beef prices are down close to 20 per cent but pork prices are really actually very stable and what I'm talking about is wholesale values for those 3 competing meats.

And so the expectation is that retailers will start featuring some of the other meats over pork because their margins are so much better on them.

They're buying them a lot cheaper and quite simply the consumer looks for variety in their purchases and pork has been a big recipient of some good solid domestic demand.

On the export side things are a lot flatter.

There's not a lot of positive news on the export side of things.

As it sits right now pork exports are kind of struggling, whether it be from Canada or from the United States, and that is in large part because the exchange rates have not favored North American Pork.

Fulton says to date pork has been very effective at growing its domestic market.

He says, even as some of those competing meats are coming on strong, he remains optimistic about the demand scenario and its impact on hog producer profitability in western Canada.

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