Chinese piglet price explodes after intervention

The Chinese piglet price has risen by about 50% since mid-May compared to the beginning of the year. At the end of May, piglets were paid 17,52 yuan per kilo. At current exchange rates, that translates to a price of €2,24. This means that China appears to have taken another step towards making Chinese pig farming profitable again. In large parts of 2023 and 2024, oversupply meant that the income of Chinese pig farmers did not cover costs.

The situation has been turned around by government intervention. The Chinese Ministry of Agriculture has decided that the sow herd should be reduced from 41 million to 39 million sows. Currently, China is about half way to the target and has about 40 million sows.

Pig price lower
With the increase, the market is anticipating a significant increase in slaughter prices. Chinese pork prices at the same time lower. Although pig prices were significantly higher at the end of May, the increase is considerably lower than the increase in piglet prices. Since March, the pig price rose from 15,18 to 16,70 yuan (€1,94 to €2,13).

Pig farmers only buy piglets at prices at which they think they can make a profit. Given the high prices charged for piglets, Chinese pig farmers estimate that prices will increase sharply. Although pork and pork prices will probably not rise that much in relative terms. In a tighter market, the piglet price generally grows faster than the slaughter and meat prices.

According to the Chinese Ministry of Agriculture, the discrepancy can be explained by a high slaughter rate. At the moment, the pork supply is on the high side because many pigs are being slaughtered. The market expects that there will be considerable pressure on the supply of pigs for slaughter in the third quarter.  

Is the situation sustainable?
Now that the Chinese government is getting its way, the question is to what extent the state will succeed in stabilizing the market. Now that prices are higher, it is more attractive for Chinese pig farmers to sell more piglets. The question is whether the government can maintain control over supply with the current target.