Chinese pig farmer is already concerned for 2017

The Chinese New Year - which is celebrated from January 28 to February 5 - is the most important Chinese festive period characterized by extensive meals with family, the color red, lanterns and of course lots of fireworks. This is often the only time of the year when a Chinese family comes together as a whole. Traditionally, pork is the most important ingredient to make the meal festive. It is even suggested that these holidays account for a quarter of annual pork consumption. Forecasts indicate that around 140 million pigs will be slaughtered in the run-up to the festival to meet demand.

However, pig farmers in China cannot fully exploit the Chinese New Year, as margins have approximately halved since June 2016. Pork consumption this year is also unlikely to reach the levels of previous years, because the economy in China is less prosperous and this has a negative impact on the spending capacity in China. That is why Chinese consumers are turning to cheaper alternatives such as poultry and mutton this year. 

Despite an imbalance in supply and demand on the Chinese pig market, which in theory speaks to the advantage of the Chinese pig farmer, the pig market in China is declining. This is mainly due to the import of foreign pork, mainly from Europe, America and Brazil. According to analysts, 2016 was an excellent year for the Chinese pig farmer, but expectations for this year are less positive, given the falling pig prices. Due to the moderate prospects, pig farmers are therefore cautious about expanding, despite the currently profitable margins. Chinese analysts expect pig prices in China to be in line with the five-year average in 2017, which has not always been profitable. In any case, the peak of mid-2016 is a thing of the past.

In addition to declining pig prices, pig farmers are also confronted with rising feed prices. Soy stocks in China are at 363.500 tons, the lowest levels in three years, which is pushing up prices. The prices of alternative feed raw materials such as rapeseed, wheat yeast concentrates and sorghum are also on the rise as a result of deviating demand. This trend also means that Chinese pig farmers are vigilant and cautious.

Until the Chinese New Year, Chinese pig prices can probably hold up reasonably well, albeit at the lower end of the 2016 price level of approximately 2,30 euros per kilo for live pigs. However, expectations for the following months are negative. Much will depend on the volume of imports of European pork, among other things, that China will import and how the Chinese economy will move.