Data released by Statistics Canada showed a larger than anticipated total hog inventory, reconfirming our forecast of recovery and modest growth. Sow inventories are lower than expected, especially given a reduced sow slaughter in 2011. Based on indications of increased productivity and improved farrowing intentions for the first half of 2012, Post revised upwards pig production for the year by 350,000 head.

Minor increases were brought to exports and total slaughter numbers. Producers remain cautious with respect to a quick expansion given the difficulties experienced over the past several years. A very moderate growth seems to be their best strategy for the moment.

On modestly higher slaughter numbers and increased carcass weights, Post adjusted upwards by 10,000 metric tons the pork production volume. Imports are not expected to change, however, sustained international demand, flat domestic consumption and increased meat supplies prompted Post to review upwards by 15,000 metric tons the total export volumes.

It will remain interesting to observe how the various export markets will evolve for Canada in 2012. While the overall volume is estimated to increase compared to the earlier USDA forecast, there are shifts to be expected among some of the principal markets.

In the case of Korea, a free trade agreement with the United States will provide a tariff preference to American pork and may squeeze some of Canadian pork out of that market. At the same time, with changes in the import quota system, the Russian market will now see all exporters competing for one single quota volume.

In addition, Brazil, which has been excluded from that market for lack of plant approval for most of 2011, will now be back among the principal exporters, as Brazilian packers are now gradually regaining their approval from Russian authorities.

Further Reading

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