(courtesy GOA)

While the Chinese stock market has recently done poorly, pork demand remains strong.

Tyler Fulton, director of risk managemnet for h@ms Marketing Services says because the Chinese market has shrunk their supply, they've been short of pork. He says the changes in stock market haven't affected how much pork is eaten in China, but it has affected how much is produced.

"What happened was the Chinese domestic supply actually shrunk significantly in 2014 because prices were so terrible for producers," he says, "they shrunk so much that it left them quite short, which lead them to having to bring in more pork to meet the demand that was still there."

Fulton says with the strong U.S. dollar, however, the Chinese demand for pork has been more in favour of European suppliers. However North America certainly has the supply right now.

According to Fulton, weekly hog slaughter in the U.S. is running 11 per cent higher than last year, which is about 3 or 4 percent higher than the USDA forecast. He says over the past month or so, traders generally thought hog inventories would fall more into line with this forecast, yet populations have stayed strong.

He thinks this is partly because last year, before the outbreak of PED virus, hog producers were starting to expand operations, but then when the disease hit, the losses camouflaged the growth.

"When the disease losses started to trail off and it became apparent the vaccines where effective, it was only then -- I'm really talking about this summer -- that it became apparent, I think, that the U.S. market grew over that time frame, even though their numbers had a bit of delayed effect in showing up to the market," he says.

And despite the unexpectedly high hog populations, prices are holding steady. Fulton says cash values have gone down, but they held on after a typically overwhelmed post-Labour Day supply.

"Wholesale pork prices -- that is the price that many packers will receive for their primal cuts -- they've been really very stable," he says. "Packers are paying less for producers' hogs, but are still receiving good money for the primal cuts, and so the result has been packer margins that are about the best they've been in a year's time."

Fulton says forward prices for November and December are discounted about $15 from current prices, but that isn't too far off from the normal seasonal trend.