Ontario Pork Prices

While COVID-19 had the potential to be extremely disruptive to the Canadian pork supply chain, the sector showed resiliency by adjusting to market changes to ensure industry continuation. Unlike other non-agricultural firms that were mandated to close at times, the pork sector was deemed an essential service and allowed to continue operating throughout the pandemic. Evidence of this resiliency is seen in three main ways. First, market access to the United States was maintained for both live pigs and pork exports. Second, Canada not only maintained market share in global pork exports, but it also actually increased shipments because of strong demand from China caused by African swine fever. Third, the challenges of processing plant closures and labour shortages were overcome in a variety of ways including increasing interprovincial shipments and increasing live pig exports to the United States. Pork consumption on a per capita basis continued the historical downward trend, and it is expected that consumers will return to their normal consumption patterns (e.g., dining at restaurants) despite job losses. At the meat processing level, it is anticipated that there will be an acceleration in the process to automate.

Description

By Ontario Pork – Market hogs are sold on several different arrangements in Ontario. Producers may choose between marketing their hogs on the Pool, the Pool Plus program, or a variety of direct contracts with meat packers. Currently, most hog prices in Ontario are based on Ontario Pork’s standard formula price. The standard formula price is based on the US National Cost price, the Canada-US exchange rate, standard dressing percentages, metric conversion, and a negotiated divisor. Even though most prices in Ontario are based on this similar formula, prices are not always the same, and sometimes move in opposite directions. The single most important reason prices move in opposite directions is timing. Some price agreements are very responsive to current market conditions, while others are based on market prices from the previous week.

The Pool price and contracts based on rolling averages are examples of prices that may move drastically before other prices “catch up.” The Pool Plus price and contracts based on the previous week are examples of prices that follow the market; these prices may move higher even as current market prices are moving lower. Because prices can move in different directions, the spreads between them will vary from week to week. The Pool and Pool Plus prices are calculated each Thursday. In the meantime, Ontario Pork reports a daily average price and a weekly average price to give an indication of where prices are headed. These daily average prices are reported on radio, television, the Internet, and in several newspapers. The daily average price is based on hogs sold on the Pool program and on the Pool Plus program, but it does not include contract prices. Again, because the Pool and Pool Plus prices can move in opposite directions, the average daily and weekly prices that are reported will only indicate a general trend.

Features

The sizzle has gone out of the bacon for Ontario pork farmers. After enjoying record prices just a couple of years ago, farmers have watched prices for pigs tumble in the last couple of months to the point they’re selling hogs for less than it costs to raise the animals. The next few months could be even tougher, analysts warn. “We’ve got a stressful fourth quarter coming at us regardless of what happens,” said Kevin Grier, a food market analyst based in Southwestern Ontario. The problem is a huge supply of pigs in North America and a limited ability of plants to process the animals. “We know the numbers in the United States are going to be bumping against their kill capacity,” Grier said.

Canadian pork trade

While Canada has only 1.9% of the global sow inventory, it is the third largest pork exporter in the world followed by the EU (4.4 million metric tons) and the United States (3.3 million metric tons) (USDA, 2021b). In 2020, Canada exported 1.49 million metric tons of pork to 93 countries, which represented 73% of production (USDA, 2021b). Overall, Canadian pork exports in 2020 totalled $5.06 billion, which is an increase of 19.9% in dollar value and 17.9% in volume (kg) when compared to 2019 values. Exports to the United States were valued at $1.26 billion in 2020, similar to 2019. Interestingly, imports of US pork into Canada for 2020 were valued also at $1.26 billion and the US represented 86% of Canada’s total pork imports.

China was the top export market for Canadian pork in 2020 reaching a value of $1.6 billion, which is an increase of 170% compared to 2019 and by 139% in terms of volume. Exports to China were strong to compensate for smaller domestic pork supplies resulting from ASF. It is anticipated that China’s pork imports may decrease somewhat from 2020 levels but will still remain strong over the next several months

Ontario Pork Prices

$500.00-$800.00/ Metric Ton

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