Chinese pig price down, while demand rises

China has helped the European pig sector recover. Export volumes increased rapidly last year and this trend will continue in 2017.

The Chinese consumption of pork is expected to increase further, while the sow herd is shrinking. That will probably increase the import requirement. The pig price, on the other hand, is falling.

Population growth in China is still increasing. In 2016, China had nearly 1,4 billion people. By way of comparison: Europe has approximately 730 million citizens. In the short term, the number of Chinese is expected to increase further. In the longer term, up to 2050, a contraction is expected. This is due to the aging population. Due to increasing prosperity, the spending pattern of the average Chinese is rising. This also increases the consumption of pork.

Consumption is increasing
Market researchers expect pork consumption in China to increase by up to 7 million tons until 2025. For 2017, growth is expected from 3,3 percent to 55,8 percent compared to last year. Chinese pig farmers are not going to close this gap. Pig prices are motivating, but strict environmental and animal welfare rules have a demotivating effect. Labor is scarce and feed costs are high. US analysts therefore expect a contraction of 5 to 6 percent this year.

Chinese pig price significantly less
This will reduce meat production to 51 million tons. The gap between consumption can largely, for 70 percent, be filled by Europe. America and Brazil, among others, supply the remaining 30 percent. At least, that's roughly how the ratios were in 2016. The Chinese pig price has dropped significantly this year. From mid-February to the end of March, the price fell by almost 30 cents to the equivalent of 2,22 euros per kilogram of live weight.

Price pressure
Compared to a year ago, the contrast is even greater. In April last year, the pig price was 2,70 euros and then rose to 2,82 euros. The one-year write-down also explains why European exporters are currently talking about some price pressure in China. 

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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