China Hog Markets Trending Upward
By Lyle L. Jones, Director of Sales for China, Genesus Inc.
One only has to glance at the chart below to see 2021 has been a challenging year for the China Swine Industry. However, there is reason for optimism as pig prices across the board have recently been trending upwards. Friday, December 3rd, the nationwide average slaughter pig price closed at 18.19 yuan/kg ($1.28/lb.) up from 12.7 yuan/kg ($0.90/lb.) previously This is welcomed news for an industry that saw prices free fall in the first 6 months of this year.
To gauge if this trend is likely to continue, let’s take a look at weaned pig prices as they are typically a good indicator of future slaughter pig prices. At the start of 2021, 15kg (33lb.) pigs were selling for 1600 yuan ($250) per head before plummeting to 300 yuan ($47). However, as of December 5th, the average price of piglets was 550 yuan or $86.24 per head up 16.67% month on month.
Producers are now buying weaned pigs with the aim of selling finished pigs later, at even higher slaughter pig prices. At the same time, Cull sow prices are 12.5 yuan/kg or $0.88/lb., up about 18% supporting the upward trend.
We believe no one pays more for pigs than they have to, and rising prices are indeed a sign the supply is tightening. Let’s take a look at other factors affecting supply.
Feed Ingredient Prices
As of the 5th, the average price of corn was 2763 yuan $433.79 per ton ($10.84/bu.). At the same time, the average price of soybean meal was 3700 yuan/ton $580.90 ($12.53/bu.) up 1.54% month on month. So it looks like high feed costs are here to stay for the foreseeable future, keeping expansion forces in check.
The epidemic caused by ASF still plagues the pig industry. Many farms have experienced the pain of “pulling the tooth” to control the wild strain. Unfortunately, that strategy does not seem to work at all with the strains caused by ineffective vaccines.
Due to short supply of breeding pigs, farms have been populated with low-quality multi-cross females. Industry analysts estimate 25-30% (or more) drop in productivity and efficiency as a result. Despite an increase in imports of GGP pigs over the last couple of years, many producers still do not have access to higher quality genetics.
Outlook for 2022
Our sources have been telling us for several months that sow slaughter is way up. A recent public report indicates sow inventory declined by 1.21 million in October alone. Who knows how much was planned replacement versus lost to disease or simply a need to generate cash? At the same time, slaughter pig weights have been coming down. No doubt less kg of pork entering the marketplace.
We look for the upward trend of pig prices to continue into 2022 and return to reasonable profits soon.
Categorised in: Featured News, Global Markets
This post was written by Genesus