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Canada Livestock and Products Semi-Annual - March 2007

by 5m Editor
1 March 2007, at 12:00am

This article provides the pork industry data from the USDA FAS Livestock and Products Semi-Annual 2007 report for Canada. A link to the full report is also provided. The full report includes all the tabular data which we have omitted from this article.

Report Highlights

This report reviews developments in the Canadian pork sector that will influence the production and trade of live animals, beef and pork through 2007.

Executive Summary

THIS REPORT DOES NOT CONTAIN OFFICIAL USDA DATA

  • Canadian hog farmers ushered in 2007 with fewer hogs on farms. There were 14.3 million hogs on farms as of January 1, 2007, 2.7% below the same date last year.

  • Profitability has been under pressure in the Canadian hog industry. Hog receipts were 13.6% lower than for 2005.

  • Pork production is forecast to be about 3% lower in 2007, reaching about 1.8 million metric tons. It will mark the third consecutive year of a pork production decline in Canada.

  • Canadian live hog exports to the United States reached a record 8.8 million head during 2006, 7% greater than a year earlier. For 2007, post forecasts Canadian live hog exports to the United States to reach about 9.2 million head representing another year-to-year increase of almost 5%.

  • There is a degree of uncertainty among Canadian hog producers surrounding the restructuring actions of Canada’s major pork processors, Maple Leaf Foods. Inc., and Olymel and additional concern surrounding the upward pressure on feed prices related to the feedstock demands of the biofuel industry.

  • Per capita pork consumption in Canada has spiraled to its lowest level in more than a decade falling by almost 25% in the five years ending 2006.

Hogs and Pork

Canadian hog farmers ushered in 2007 with fewer hogs on farms. Statistics Canada (SC) recently released the Canadian hog inventory as of January 1, 2007 and the data show that the hog herd has stabilized after almost five consecutive quarters of decline. According to the SC survey, there were 14.3 million hogs on farms as of January 1, 2007, 2.7% below the same date last and virtually unchanged from October 1, 2006.

Profitability has been under pressure in the Canadian hog industry. Slaughter hog prices weakened in the fall of 2005 and have remained relatively low since. During the first nine months of 2006, the average price for hogs was 14.2% lower than the same period in 2005. Lower prices led to a 13.6% drop in hog farm cash receipts during 2006. Domestic slaughter has continued to decline after reaching a record high in 2004, mainly because of lower prices paid to producers and higher feeding costs. Hog slaughter dropped 2.4% between 2005 and 2006. In 2006, Canadian hog producers exported 8.8 million live hog to the United States, up 7% from the 2005 level of 8.2 million head. About 70% of live Canadian hog exports are feeder pigs destined for finishing and slaughter in the United States.

For 2007, Canadian hog producers face a number of developments that will impact on profitability, the level of pork production, the number of live hog exports to the United States, and declining domestic pork consumption.

Canadian live hog exports to the United States reached a record 8.8 million head during 2006, 7% greater than a year earlier. For 2007, post forecasts Canadian live hog exports to the United States to reach about 9.2 million head. Some of the reasons for forecasting increased Canadian live hog exports include: 1) Canada’s major pork processors, Maple Leaf Foods. Inc., and Olymel are in the midst of restructuring their pork operations, a development that is expected to result in fewer plants slaughtering hogs in Canada in the coming years, 2) In Manitoba, the province that exports the majority of live hogs, a provincial government environmental study has caused uncertainty in both the hog production and hog processing sector resulting in the abandonment of a major project to construct a large slaughter facility and; 3) uncertainty concerning upward pressure on the price of feed related to the feedstock demands of the biofuel industry causing lower profitability for hog finishers. Combined, these factors are forecast to contribute to an increase in live hog exports to the United States in 2007.

Production

Canadian pork output fell to an estimated 1,870 thousand metric tons, 2.3% below the 2005 level of 1,914 thousand metric tons. For 2007, a lower hog inventory, a smaller pig crop and increased exports of live hogs to the United States are expected to reduce Canada’s pork production potential. Post forecasts 2007 pork output to drop to about 1,810 thousand metric tons and result in the third consecutive year of a pork production decline for Canada.

Consumption

Per Capita Consumption

After peaking in 2001 at 28.94 kilograms per capita, Canadian pork consumption has declined annually in each of the subsequent years with the exception of 2004. If post estimate of 2006 per capita consumption of 22.25 kg holds true, Canadian per capita pork will have fallen almost 25% in the five years ending 2006. Some of the factors behind declining pork consumption include 1) Strong retail prices during a period when BSE-related issues boosted Canadian beef supplies, 2) Steady to increasing Canadian exports of pork and; 3) pork’s inability to capitalize on foodservice market gains shared by other meats and fish.

Retail Pork Prices and Hog Market Prices

The following tables illustrate average retail pork prices and producer market prices for slaughter hogs. While retail pork prices were peaking in 2005, producer prices for market hogs were softening. High retail pork prices are thought to be one of the factors contributing to a significant decline in Canadian pork consumption over the past five years.

Trade

Pork Exports

After more than ten years of consecutive annual increases, Canadian pork exports during 2006 fell fractionally from the year earlier level. On a carcass weight basis, Canadian pork exports reached an estimated 1,080,000 metric tons during 2006, 0.4% below the 2005 level of 1,084,000 metric tons. During 2006, significant increases of Canadian pork exports to Russia, South Korea and Romania failed to offset moderate export declines to the United States and to Japan. For 2007, the decline in hogs numbers and prospects for increased live hog exports to the United States point to lower pork exports, probably in the neighborhood of 2-3% lower than the 2006 level. The following table shows Canadian pork exports, by country, on a product weight basis, 2004-2006.

Pork Imports

U.S. pork sales to Canada increased 6% during 2006 to reach 111,751 metric tons (product weight). Canadian pork imports have increased in recent years reflecting the appreciation of the Canadian dollar. More than 80% of pork imported from the United States is destined for Ontario and British Columbia. For 2007, demand for U.S. pork may decline slightly as a result of anticipated lower Canadian consumption and lower Canadian pork exports.

Further Information

To view the full report, including tables, please click here

List of Articles in this series

To view our complete list of 2007 Livestock and Products Semi-Annual reports, please click here

March 2007