Farm Credit Canada says the restoration of pork processing capacity, as packing plants adjust to COVID, combined with expanding export opportunities due African Swine Fever have helped improve the outlook for Canada’s pork sector.
Farm Credit Canada’s 2021 Cattle and Hog Outlook Update suggests a mixed outlook.
FCC Principal Economist Craig Klemmer observes a key factor in the equation for hogs has been how efficiently the packing plants are running.
There continues to be some hiccups happening because of COVID and some restrictions, especially in eastern Canada but, generally speaking, food processing has picked up and the hog processing is doing fairly well now and getting its feet back underneath it.
In western Canada plants are up and running. We have had some challenges but we’ve mostly overcome that and we’ve moved through the majority of all of the backlogs across the country.
When we look at some of the factors, we are continuing to see African Swine Fever in China. There’s a lot of concern that we won’t see that full recovery and that’s going to create opportunities for protein into the Chinese market.
We also saw in Europe, and specifically in Germany, having African Swine Fever has reduced some of its export potential. When we think of that ranking, Germany is one of the major players in the export market so that’s creating new space for Canadian exports and, when we look at that North American perspective, we’re seeing overall prices increasing and that’s being supportive.
Domestically as well, we’re slowly seeing some reopening of economies across Canada in varying degrees and, as we get into barbecue season, I think there’s more opportunities for further reopening and optimism for people getting together and standing over the grill, cooking pork or beef products and those are going to create some stronger demand domestically here.
Craig Klemmer, Farm Credit Canada
Klemmer acknowledges it’s a bit of a mixed story but the outlook is improving so we do expect margins to be in profitable for 2021.
