Lyle Jones, Director of Sales, China
China’s Hog Market is a tough one for producers. A quick glance at the price trend graph below shows slaughter prices have remained all but unchanged for the last 30 days. Last Friday’s close was RMB 14.28/kg., ( $0.91/lb.) virtually unchanged from one month ago.
According to the monitoring by the Ministry of Agriculture and Rural Affairs, in the first week of May, the average price of live pigs nationwide is down 0.6% compared to the previous week and a year-on-year decrease of 1.4%. The average price of pork nationwide is 24.63 yuan/kg ($1.60) , a decrease of 0.1% from the previous week and a year-on-year increase of 0.5%.
Given four consecutive months of losses in the pig industry, many large pig companies have begun to adjust their production goals. Four listed pig companies, including Aonong, Techbank, DBN, and Recon lowered their sales targets for this year, with a total reduction of 6-8.7 million pigs.
In the first quarter of 2023, publicly listed pig companies incurred huge losses from pig production. According to the analysis by Xinzhupai, four top companies Wens, New Hope, Muyuan, and Zhengbang lost a combined 6.8 billion Yuan (~$1 billion USD) in Q1, 2023 and the losses continue.
Based on an average slaughter weight of 110 kilograms (245lb.), losses from the 21 listed pig companies range between 100 ($15) and 600 yuan ($85) per head. The top three pig companies have losses of over 400 yuan ($57) per head. We are hearing reports of empty barns and reduced sow inventories all over China and its not hard to understand why.
Our contacts are telling us the ASF is still a major problem, and the current spread is most severe since 2019. This outbreak is of the low virulent strain from vaccine use. Numerous ASF vaccines are available in China, and it seems many have unintended consequences. Producers cannot just “ pull the tooth” removing pigs with clinical signs but must ship the whole herd. Pigs of all weights are going to the slaughterhouse which puts more pressure on market prices.
For producers, improved pig prices cannot come soon enough. One bright spot in the market is weaned pig prices, often thought to be a leading indicator of future market hog prices. Weaned pig prices are up 12% from RMB 512 ($74.50) to RMB 589 ( $83.45) within the last 30 days. We look for pig prices to start improving in June based upon previous sow liquidations, and significant increases by years end.
Categorised in: Featured News, Global Markets
This post was written by Genesus