Higher bacon prices still to come, analyst says

CNS Canada — Rising pork prices and shrinking bacon packages have made headlines across Canada recently — but consumers should prepare to spend even more for bacon over the next few months, as processors between the farmer and the grocery store are still seen to be losing money.

Western Canadian hog producers are currently experiencing “some of the best prices they’ve ever seen for this time of year,” said Tyler Fulton, director of risk management with Hams Marketing in Manitoba.

Strength in the hog sector was primarily a short-term phenomenon linked to the porcine epidemic diarrhea (PED) virus, he said. The virus is not a threat to humans, but it can kill young pigs and has led to a reduction in hog supplies across North America.

While rising bacon prices have been in the mainstream news before, Fulton said the quickness of the story coming to light this time around was somewhat unprecedented.

There’s usually more of a lag between what is happening in the countryside and rising prices in the grocery store, he said.

Packers are currently in the middle: they are seeing some short-term pain, as the prices they receive for the pork are not enough to pay for the animal, said Fulton.

As a result, he said he expects to see pork prices rise another 15 to 20 per cent over the next few months, as all of the production issues have not yet been factored in to the end prices.

Consumer prices are fairly sticky, which means what goes up may not necessarily go down as quickly in the grocery store, said Fulton. However, the same can’t be said on the farm side and the hog supply situation will eventually normalize.

In the meantime, he expected western Canadian hog producers would continue to see good prices for their animals, especially as most of the region has been able to ward off the PED virus fairly well so far.

Out of 61 Canadian farms on which PEDv has been confirmed in hogs, 58 are in southwestern Ontario, with one each in Manitoba, Quebec and Prince Edward Island. Two off-farm “high-traffic” sites in Manitoba have also seen positive cases of PEDv in hogs.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

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