There are a number of factors that affect your business, but none so directly as pork prices. That's why, in addition to posting the latest pricing information on our website, Alberta Pork shares key reports and news stories with producers.
Below is a recent Globe & Mail article on the present state of pork prices and what to expect in the months ahead.
Pork prices will be slow to return to normal
Source: Globe & Mail
Aug 19, 2014 3:05
Source: The Globe and Mail
Page: B3
Edition: Ontario
Section: Report on Business
Byline: DAVID HAINS
Pork futures have fallen sharply over the past five weeks, but bacon lovers may not see a price decrease in their local grocery store.
In the first half of 2014, pork prices shot up as a swine virus killed piglets and kept supply low. Retail prices followed, as meat processors were forced to pass on higher pork prices to consumers. In its latest quarterly results, Maple Leaf Foods Inc. announced it raised bacon prices by 26 per cent and sausage prices by 18 per cent. Despite efforts to control costs, the company narrowly missed analyst expectations.
From February to early July, lean hog pork futures saw a 39.2 per cent increase on the Chicago Mercantile Exchange. Prices have retreated 20.6 per cent since July 7, but analysts say consumers might not be able to buy cheaper pork chops any time soon.
Randy Duffy, a research associate at the University of Guelph, says prices in grocery stores haven't fully reflected the big spike in pork futures over the past few months.
"Retailers like to keep their prices fairly stable," he said in an interview. "They change them, but they don't like to have large changes in a short period of time if they can help it."
The summer barbecue season has been expensive for consumers - in addition to high pork prices, cattle prices have reached historic highs. Mr. Duffy said there has been some product switching to alternatives such as chicken, as consumers seek more affordable products.
Mr. Duffy cited an increased number of pigs, heavier pigs, and less demand from the Russian market for the recent decline in pork futures.
"In terms of when that might trickle through to the retail sector, I can't give a definitive answer." Mr. Duffy said that with pork's typical seasonality, the product tends to be more expensive in the summer and cheaper in the fall, "but who knows what retailers want to do?"
Despite the recent 20.6 per cent decline in prices, pork prices are still high relative to historical averages. Pork futures are up 22.6 per cent year over year. Retail prices for pork chops are up 18.8 per cent year over year, based on data from the U.S. Department of Agriculture.
Kevin Grier, a livestock and meat market analyst, says that high pork prices will persist as long as porcine epidemic diarrhea continues to be a threat to the industry.
"That's the number one threat," he says, adding that pork futures only shot up in February when people understood the seriousness of PED.
Mr. Grier says that the market had an overreaction to the virus by June, when pork was trading at record levels. "It got to the point where I could not rationalize the price levels, even with the kills that we saw," he says in explaining the recent pullback in prices.
The PED virus spread to Canada in the winter of 2014, and thrives in cold weather.
Source: Alberta Pork