Continued Decline: Canadian Swine Herd Shrinks Further in 2024

The contraction of the Canadian swine herd persists into 2024. Despite higher-than-expected sow productivity in 2023, larger slaughter and export figures have led to a decrease of 140,000 head in the beginning hog inventory compared to the previous year. To put this into perspective, the Canadian swine herd had already shrunk by 265,000 head between January 2022 and January 2023. In another indication of this trend, the beginning sow stocks display a two percent reduction in the sow herd at the start of 2024, marking the lowest January 1 sow numbers since 2015. Additionally, there has been a two percent decline in the number of farms reporting hogs compared to January 1, 2023, suggesting a continued exodus of producers from the industry. This ongoing consolidation is further underscored by a slight increase in the average number of animals on remaining operations.

The decline in sow inventories varies across Canada in 2024. Reductions in the Canadian sow herd have primarily occurred in Eastern Canada, largely due to processing reductions, while Western Canada has seen a slight increase in its sow herd since the beginning of the year. Interestingly, despite Olymel idling five sow barns in Western Canada, removing approximately 16,000 head from production, there has been a rise in sow numbers in the region. Olymel’s restructuring has also affected processing capacity in Eastern Canada, where the closure of its Vallée-Jonction plant in Quebec at the end of 2023 has had an impact.

Producers in Eastern Canada, particularly Quebec, have been slower to reduce production, leading to a backlog of market-ready hogs. Sow productivity has likely contributed to this trend, reaching a new high in 2023 and anticipated to remain strong in 2024. Consequently, FAS/Ottawa has revised the 2024 pig crop forecast to 29.4 million, representing a two percent reduction compared to 2023. However, Quebec producers are under pressure to further reduce production, with estimates suggesting a 15% cut is necessary to align with reduced processing capacity.

Despite this pressure, Quebec and Ontario market hogs have found shackle space in the United States, potentially mitigating reduction efforts if producers continue to find value in this trade flow. FAS/Ottawa is adjusting live export numbers for 2024 higher, while maintaining the original forecast trend for live exports to decline in 2023. The backlog of market hogs is expected to continue driving larger market hog exports through the first quarter, possibly the first half, of 2024. Although this number is expected to ease in the second half of the year as producers adjust production, market hog exports will likely remain at elevated levels.

Feeder exports are projected to increase slightly in 2024, particularly out of Western Canada, supported by reduced disease pressure and lower mortality. However, contacts report limited meaningful expansion in finishing space in Canada, especially in Eastern Canada with reduced processing capacity. While additional processing capacity exists in Western Canada and has experienced improved utilization, expansion in sow slaughter in the region may limit cull sow exports to the United States in 2024 and beyond. Notably, the North 49 Foods cull sow plant in Saskatchewan, operational since fall 2023, has the potential to process 225,000 head per year. Additionally, the joint venture between Winkler Meats in Manitoba and Johnsonville will expand Manitoba cull sow slaughter capacity, although this plant expansion will not be operational until 2025.

Although slaughter numbers were higher than anticipated in 2023, FAS/Ottawa is sticking to the original slaughter forecast number for 2024. This forecast predicts a two percent reduction in slaughter, primarily due to the smaller pig crop and decreases in processing capacity in Eastern Canada. However, improved utilization in Western Canada is expected to bolster overall slaughter numbers.

FAS/Ottawa is making a slight downward revision to the 2024 pork production forecast, now projected at 2,025 metric tons. Carcass weights are trending heavier, and with a backlog of market-ready pork in Eastern Canada, heavier weights are expected to persist through the first half of 2024. However, weights are anticipated to ease in the latter part of the year.

On the import front, FAS/Ottawa is adjusting the pork import forecast slightly upward for 2024, with imports expected to remain relatively stable compared to 2023 volumes. The increased demand for pork in 2023, driven by improved Canadian domestic demand and sustained cost competitiveness against chicken and beef, is likely to continue due to Canada’s aggressive immigration strategy and the prospect of a longer grilling season with milder weather.

Although Canadian production surpasses domestic demand, consumer preferences for certain cuts necessitate imports to supplement the domestic supply. While imports from Brazil have been increasing since their approval in 2022, volumes remain small compared to those from the EU and the United States. Imports from the EU are expected to decline in 2024 due to reduced production and ongoing challenges with African Swine Fever (ASF). Canada will continue to rely on the United States as a primary source of pork imports.

In contrast, the forecast for pork exports in 2024 is being revised upward, with a projected one percent growth. This growth is driven by increased demand in the Indo-Pacific region, as Canada aims to fill market gaps left by reduced EU supply. Although the United States will also compete to meet demand in these markets, Canadian pork will remain supported by U.S. demand, albeit unlikely to reach the highs seen in 2022.