A Fall to Remember (Opinion Piece) -Grier 2017

Posted in: Economics, Pork Insight Articles by admin on May 1, 2017

Although Canadian hog producers were losing about $20-$30/head this fall with pricing trending down to the $110 range, it was a very positive fall and early winter for the industry. The United States was in danger of marketing hog volumes that were in excess of industry capacity. The concern for this fall if the industry consistently breached capacity with unyielding numbers of hogs would be a complete pricing collapse. Weekly kills of well over 2.5 million head have been common since September, however despite the historic kills and production this fall, packers managed to keep the pork cutout value strong. As of the beginning of December, the cutout value had increased over the fall. Packer marketers were able to maintain and increase the value of the cutout in the face of huge production volumes. This combined with efficient plant operations and  lower hog prices meant that packers had a fantastic fourth quarter in terms of profitability.

Producers staying current and marketing hogs ahead of schedule prevented weights from building and packing backups. These phenomenon coupled with the positive force of pork demand has led to an overall beneficial fall.

Canadian pork consumption increased nearly two per cent in the third quarter this year. Canadian consumer pork prices, as measured by the Statistics Canada Consumer Price Index, increased by about one per cent in the third quarter.

The industry now has so few players that it is necessary for both packer and producer to address all barriers to expansion and growth, including price. Packers and producers must work together now more than ever.

A Fall to Remember (Opinion Piece) -Grier 2017

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