Hog market at seasonal lows, turnaround expected

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MarketsFarm — The Canadian hog market may be at its seasonal lows, but tightening worldwide supplies should underpin values over the next few months.

“We’re at a seasonal time of year when prices move lower,” said Brad Marceniuk, livestock economist with Saskatchewan Agriculture, pointing to higher U.S. slaughter numbers and a slowdown in North American barbecue demand. He said producers were losing money in the current market, but expected things to turn around over the next few months.

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“Global supplies are declining… so at some point, as supplies continue to decline, demand for our pork will go higher and push prices higher,” he said. China still has pork in cold storage, but the shortfall will start to be seen in October/November.

African swine fever (ASF) has already decimated China’s pork sector, while other nearby countries including Vietnam and, most recently, South Korea have also been hit by the disease.

ASF does not affect humans, but the highly viral disease is nearly 100 per cent fatal for hogs with no known cure. China produces roughly half of all the pork in the world, and has lost 25 per cent or more of its production because of the disease.

Canadian pork sales to China have been dramatically cut due to the ongoing diplomatic dispute between the two countries. The U.S., Brazil, and Europe have all increased exports, although seasonal issues have also weighed on U.S. prices.

A resumption of Canadian sales to China would be welcome, but in the meantime other export customers will likely pick up some of the slack, especially as ASF has spread to other countries, according to Marceniuk.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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