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How will U.S. tariffs impact Canadian livestock prices?

Reference: FCC

With Trump returning as U.S. President, Canada and the rest of the world are bracing for the imminent imposition of punitive tariffs. The upcoming tariff shock means Canadian prices are likely to adjust downward, meaning farm cash receipts will be restrained, particularly for livestock producers.

Hogs
Canadian hog producers are highly reliant on U.S. market access, though the dynamics between eastern and western producers deserves some attention. Canada exports 22% of its total hog production, with exports to the U.S. making up 99% of all exports. Of those pigs that are exported, 60% (or 4 million pigs annually) are isoweans weighing less than 7 kgs that are destined for fattening and slaughter in the U.S. The majority (2.6 million) of these isoweans are from Manitoba.

Arguably, U.S. pork processors located in and around Minnesota are the most dependent of any meat processors in the U.S. with respect to unfettered access to Canada’s livestock supply. This would be true in the short-term at least; in the long-term, given the shorter production cycle of pigs (one sow can produce a litter of 12-14 piglets every six months), it’s arguably easier for U.S. producers to fill supply gaps for hogs than it is for cattle as Canadian exports make up only 5% of total U.S. supply.

In addition, approximately 25% (or 1.6 million pigs annually) of Canada’s hog exports are market weight hogs destined for slaughter. Over the last four years Canada has lost a significant amount of domestic pork processing capacity; one result of this has been more market-ready hogs have been sent to the U.S. for slaughter, particularly in eastern Canada. In other words, the hog sector’s reliance on access to the U.S. market has grown in the last four years due to plant closures in Canada (Figure 1).

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