Strong foreign demand boosts North American hog markets

MarketsFarm — While the volume of hogs at North American slaughter markets have kept packing plants near capacity in recent weeks, strong foreign export demand has kept pork values high.

“We expect pork values to move higher, due to the shortness of production in China,” said Brad Marceniuk, a Saskatchewan provincial livestock economist in Saskatoon.

An outbreak of African swine fever earlier in the summer reduced China’s pork production by over 35 per cent, and lowered the global pork production rate by about 15 per cent.

North American hog prices have been low due to seasonally high slaughter numbers. Typically, when the hog supply to slaughter markets is high, prices are driven lower as pork must be stored rather than shipped.

However, due to the boost in foreign export demand, pork cutout prices have provided pork manufacturers with “a large packer margin.”

For the week ending Saturday, pork cutout values averaged US$81.58/cwt. That’s a 13.6 per cent increase per hundredweight. when compared to the same week in 2018.

“Everyone takes their share of profit during certain times of the year, and this is the time where packers are taking their share of the profit,” Marceniuk said.

The U.S. exported 181,534 tonnes of pork in October, nearly a 12 per cent increase from the previous month. Marceniuk believed North American trade relations with China, which have been invariably rocky for most of 2019, will benefit from the substantial hit to China’s pork production.

“China is the largest producer and consumer of pork in the world,” he said.

“African swine fever is forcing them to import more pork from everywhere, as well as more beef and more chicken.”

— Marlo Glass reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.