Lyle L. Jones, Director of Sales, China
China’s live pig market has been trending downward since early October when slaughter pig prices were 16.2 yuan/kg., ($1.00/lb.) to 14.5 yuan/kg ($0.92/lb.) on December 22nd. Over this period, there has been a fair amount of volatility and frequent price fluctuations. For example, last Friday’s close is up from a low of 13.83-yuan ( $0.87/lb.) just two weeks prior on December 08, 2023.
The challenge with the Hog Market in China is much the same as in North America- the pig price for the first three quarters of 2023 have been below cost of production. While feed costs have declined recently, most producers’ costs were sixteen yuan/kg ($1.00/lb.) and above throughout much of the year with losses running $40 per head. For producers with one million sows and twenty pigs/sow/year output, which is twenty million pigs losing real money.
Reported losses of publicly listed companies have been staggering. On December 13th, Dai Bei Nong and Aonong Biological disclosed an intentions agreement for DBN to obtain no less than 51% of Aonong investment equity. The proposed investment was not to exceed six hundred million yuan (84 million USD). However, by December 26, both companies issued an announcement terminating the intention agreement. Also, recently Reuters announced New Hope Liuhe plans to raise 4.2 billion yuan ($589.13 million) by selling majority stakes in two of its units, to replenish capital after months of losses.
The biggest questions we hear in the marketplace are why have slaughter pig prices not improved already and when we will start to see higher prices across the board? Everyone has an opinion ranging from oversupply, lesser demand, aging population, poor economy, unplanned selling caused by epidemic disease, etc.
ASF is usually most prevalent in the wintertime but started much earlier than normal this year. It is reported the field virus type of the disease is still “hot” and causing a lot of angst among producers. Those producers’ unfortunate enough to experience an outbreak initiated unplanned marketing. We have been hearing for a few months now that there are vast numbers of empty barns around. Many producers we talk with are running their facilities at 50% capacity now, whether because of disease or simply avoidance of greater financial losses.
It will be interesting to watch the Q4 2023 reporting of the publicly listed companies to see how they finished the year and are going into 2024. Everyone is speculating higher prices and a return to profitability is coming, but the question of when. We are looking to see an improved market by late March or April 2023.
Chart showing the China slaughter pig price for the last quarter of 2023:
Categorised in: Featured News, Global Markets
This post was written by Genesus