Consumption dropped roughly 12 per cent, year over year, said FCC senior economist Justin Shepherd in a Feb. 26 article.

Demand vs. consumption

The data gives some insight into consumers’ buying decisions, Shepherd explained.

“Demand” and “consumption” are often used interchangeably, but they have different meanings in economics. “Demand” refers to what consumers want to buy, whereas “consumption” is what they actually buy.

“Pork demand has consistently been lower than consumption, indicating that consumers are buying it most likely as a cheaper alternative to beef and chicken and not necessarily because of a strong preference for pork,” Shepherd wrote.

While consumption and demand fell in the first half of the year, downward momentum increased in the third quarter as pork price inflation outpaced that of chicken. Pork consumption dropped seven per cent from Q2 to Q3.

Pork had considerable heights from which to fall. In 2023, consumption jumped by more than 14 per cent to nearly 23 kilograms per capita on an eviscerated basis, reported analyst Kevin Grier in June 2024. Beef consumption fell seven per cent while chicken consumption stayed level.

That year, retail pork prices increased by one per cent while consumer beef prices rose nearly eight per cent and chicken prices rose nine per cent, Grier said.

Global consumption growing

Shepherd said the decline in domestic pork consumption is a challenge for an industry working to recover from years of low revenues—particularly since the U.S. is expected to impose tariffs on Canadian goods.

Canada may be able to expand into markets like Mexico and South Korea, he said. Chinese consumption has plateaued and its domestic hog industry has nearly achieved self-sufficiency. However, Mexican consumption has increased 33 per cent since 2018 while South Korea is consuming 13 per cent more pork. Globally, consumption increased by two per cent in the same period.

“Both countries’ growth in consumption is being driven partially by higher production domestically but also higher imports, including from Canada,” Shepherd said.

“Exporters would do well to diversify globally and capitalize on strong world demand for pork, as they seek to offset the damage caused by American trade barriers.”

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Meat sales during the quarter—the peak season due to Lunar New Year holidays—were also sluggish as China struggles to mount a strong and sustainable post-COVID economic bounce, undermining consumer confidence.

Pork output fell 0.4 per cent from a year ago to 15.83 million tonnes, the first quarterly drop since the second quarter of 2020, data from the National Bureau of Statistics (NBS) showed on Tuesday.

Some 194.6 million hogs were slaughtered, a fall of 2.2 per cent.

Chinese hog farming companies in China had, from late last year until February, ramped up slaughter amid an outbreak of African swine fever and due to excessive supply in the market that prompted prices of pigs to plummet.

China, which consumes about half of the world’s pork, has encouraged the companies, which have aggressively expanded in recent years, to reduce hog numbers.

It has also lowered this year’s national target for normal retention of breeding sows to 39 million from 41 million.

The supply of hogs in China is, however, still expected to exceed demand due to high numbers of productive sows and a reluctance by companies to destock after making large investments.

Cash prices in the world’s biggest pork-producing nation were at about 15.2 yuan (C$2.90) per kilogramme on Monday, according to data from consultancy MySteel.

That’s up from 13.5 yuan in late February – a level well below the average production cost of 16 yuan per kg.

China’s pig herd size at the end of March was down 5.2 per cent from the previous year to 408.5 million heads, the NBS data showed. The sow herd at the end of February was down 6.9 per cent at 40.42 million, separate data from China’s agriculture ministry shows.

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“We still have cheaper grain, increased (hog) weight potential down the line — all of the above is just coming at us in the hog market,” said Jason Roose, analyst with U.S. Commodities.

Most active CME October hogs settled down 1.8 cents at 52.2 cents/lb., while August hogs fell 1.3 cent at 67.9 cents after notching a contract low at 67.725 cents (all figures US$).

Live cattle futures closed lower after a seesaw session as pressure from rising cattle supplies overshadowed support from ideas that the nearby futures contract is undervalued versus the cash market.

CME August live cattle closed Tuesday down 0.5 cent at 106.425 cents/lb., while fed cattle traded late Friday in Texas and Kansas at $111/cwt.

Cattle futures “are going to basically stay where we are until they start to get closer to cash, or unless the cash breaks,” said Oak Investment Group president Joe Ocrant.

CME October live cattle fell 0.15 cent to 108.5 cents.

CME August feeder cattle futures settled down 1.1 cents at 151.275 cents/lb. and September feeders fell 0.75 cent at 151.7 cents.

Livestock traders are awaiting direction from two big U.S. Department of Agriculture reports due Friday, including the government’s monthly Cattle on Feed report and its semiannual cattle inventory report.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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Weekly cash hog prices are higher on continued stronger seasonal pork cutout values, with lower supply creating better prices.

“Prices generally do increase over the summer,” said Brad Marceniuk, a provincial livestock economist in Saskatoon. “I expect hog prices to be pretty good this summer… prices have been moving higher.”

In Canada, the Signature No. 3 (Maple Leaf) Index 100 daily price was $181.45 per 100 kilograms on Friday, up $6.80 from the previous Friday.

U.S. daily average cash hog prices also moved higher, ending the week up, week-over-week.

“(Average) prices are in the $170 (range) which is very good. Producers are making money,” Marceniuk said.

Supplies normally increase into the fall, typically bringing down prices in the fourth quarter, Marceniuk said.

“Everything looks reasonable overall with exports. I don’t see any big changes in the short term,” said Marceniuk.

Manitoba hog farmers are experiencing a porcine epidemic diarrhea (PED) scare, with three confirmed on-farm cases reported in the last two weeks. Until last week the province hadn’t reported any new cases since January 2015.

About 50 per cent of U.S. hog farms have or have had PED, so the market has already adjusted. Since Canada’s market price is based on U.S. dollars, prices are expected to stay the same.

“While it is an individual concern for the producer, it’s not necessarily a market shock in Canada, price-wise,” said Gary Stordy of the Canadian Pork Council.

— Erin DeBooy writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Canadian slaughter-weight prices hit their lows in November and December — and since then, they have increased about 30 per cent, according to Brad Marceniuk, a livestock economist for Saskatchewan’s agriculture ministry in Saskatoon.

“We have had a nice rebound since late December, early January,” he said.

He described pork cutout values as “reasonable” right now, with an average price of $176/cwt.

Some futures prices are also drawing higher bids than the spot price, which suggests increased demand is slowly approaching, he added.

For instance, he said, the April lean futures contract is $5/cwt higher than the cash price, while the June lean hog futures contract is $15 higher than the cash price.

“So overall numbers look they should creep higher into spring,” he said.

While U.S. exports haven’t necessarily increased in price due to currency issues, he said they have definitely surged in volume over the past few months.

U.S. hogs slaughtered under federal inspection for the week ending Saturday were estimated at 2.294 million head, up 0.6 per cent from 2.281 million the previous week, and up 0.9 per cent from 2.274 million in the same week a year ago.

“This helped clean up some of the supplies that were on hand,” said Marceniuk.

One other encouraging note, he said, is that U.S. pork exports to China have also increased over the past few months relative to last year.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.

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Christmas is the top-ranked holiday for eating ham, followed by Thanksgiving and Easter, according to the National Pork Board.

November pork stocks hit a record for the month at 561.9 million lbs., eclipsing the previous November high of 558.7 million in 2012, according to the U.S. Department of Agriculture.

Ham inventories in national warehouses last month totaled 109 million lbs., the second highest on record for the month since 2013 at 116.1 million lbs.

“Grocery stores are offering great ham specials right now because they’ve been cheap to the processor that has been able to pass that along to retailers,” said independent market analyst Bob Brown in Edmond, Okla.

Ham is more bountiful after hog farmers, through vaccines and stepped up biosecurity measures, contained the porcine epidemic diarrhea virus (PEDv) that has wiped out an estimated eight million pigs since March 2013.

Less costly hams last summer offered processors the opportunity to sell them at attractive prices to grocers, who then funnelled the products into freezers for use during the Thanksgiving, Christmas and New Year’s holidays, said John Ginzel, an analyst with Chicago-based Linn Group.

His concern is that already plentiful ham in storage could lag well beyond the winter holidays into a time when the production of fresh ham supplies is expected to increase.

“With Easter being early, and we drag over quite a few unsold hams from the winter holidays, that could be a real problem,” said Ginzel.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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