With summer barbecues lighting up across the country and BLT season around the corner, the time has come for those in Canada’s hog/pork supply chain to breathe a little easier and take note of some good news. After several years of sector-changing challenges that have led to major restructuring of pork processing operations and hit a number of producers especially hard, some price stability and bullish factors supporting pork production have finally emerged.
Inventories are falling
To say that 2023 was painful for hog producers is an understatement. The glut of hogs stemming from fading sales to China and weak domestic demand, made worse by shuttered processing plants and reduced slaughter capacity, led to sinking prices and squeezed margins. But things are now starting to turn around for the industry.
Canada is still dispensing with a glut of hogs, in part by dramatically increasing the number of live animals sent to the U.S. for processing. Between January and April, over 561,000 market hogs have gone to the U.S., an increase of 144,000 from the year before. That’s helped bring some balance to Canada’s overall supply after years of tumbling prices in chaotic markets (Figure 1).
Figure 1: Canadian hog inventories on the way down
![Chart](https://images1.farms.com/farms-production-images/Portals/0/Images/econ-e-20240710-fig1.jpg)
Source: AAFC
Although our 2024 outlook indicates Canada’s hog sector isn’t completely out of the woods yet, the year is breathing some life back into hog production. We last provided an outlook for the hog sector in January, when we forecasted 2024 prices to stabilize or rise year-over-year (YoY). That was a welcome sign then, and it continues to hold now in July (Table 1).
Table 1: Hog prices remain elevated in July throughout the outlook period
Livestock prices | 2024 forecast | 2023 average | 5-year average |
---|
Ontario market hog $/kg | 2.30 | 2.20 | 2.10 |
Ontario feeder hog $/kg | 2.10 | 2.00 | 1.90 |
Manitoba market hog $/kg | 2.25 | 2.25 | 2.10 |
Manitoba feeder hog $/kg | 2.05 | 2.05 | 1.90 |
Isowean $/head | 40 | 45 | 50 |
Sources: Statistics Canada, AAFC, USDA, CanFax, CME Futures, and FCC calculations
Better prices in 2024 on average
All price forecasts for the current year (except isoweans) are higher than their respective five-year averages. But there’s some good news for isoweans too: their price has risen since January. Hog prices have, overall, risen then stabilized in 2024, in part, as a result of the improving balance in hog supplies.
Pork producers can also thank their partner in red meat markets for helping to boost pork sales. For at least a year, it’s been the most economical meat option of the big three meats (beef, pork and chicken). Consumers are still buying beef at high prices, but we can safely assume there’s some substitution effect too: for some red meat buyers, beef is simply out of reach, and they’ll substitute pork instead. Canada’s Consumer Price Index shows the largest price gains in 2024 have, in fact, come from pork, but that may not matter much to what Canadians actually buy.
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