Pig integrations in China grow at an unprecedented rate

2016 was a golden year for China. Extreme shortages created record high pork prices, with local producers realizing margins of more than $100 per pig. Europe also benefits from the shrunken pig herd in China. This demand is now likely to weaken, because the Chinese pig herd is growing by 2 percent this year. This trend has been reflected in the pig price in China for some time.

Shrinkage stopped
Between 2014 and 2017, China's sow herd shrank by 12,5 million to 37,5 million animals. This severe contraction has come to an end. Due to the good returns, Chinese pig farmers are again busy investing, expanding and imposing. On balance, a production increase of more than 3,5 percent to 53,7 million tons is expected this year. As a result, pork imports will shrink by more than 4 percent to 2,3 million tons. Historically speaking, this is still extremely high.

China is unlikely to be self-sufficient in the short term. That will reportedly take years. A positive point for European exports is that pork consumption is also growing. This year it grew by more than 3 percent to 55,8 million tons. 

Provisional forecast 2017:

• Production: 53,7 million tons (plus 3,66 percent)
• Consumption: 55,87 million tons (plus 3,33 percent)
• Import: 2,3 million tons (minus 4,17 percent)

Symbolic of the expected growth are Wen's expansion plans, which are said to represent the largest pig integration in China. This company wants to increase production by 2 million animals to 17 million pigs in 27,5 years. Other integrations also have ambitious growth plans. Environmental measures in southern China are being countered by moving production to other parts of the country. The north of China is especially popular. In total, China has about 450 million pigs. That is 60 percent of the total number of pigs in the world. 

Sow productivity increases
Sow productivity increases. At least, that's what several analysts predict. The national average currently records a production of 17 piglets per sow per year. The technical results at professional Chinese pig companies are comparable to the Netherlands. The litter size at these farms is approximately 13 to 14 piglets. The lower limit of the technical results is significantly lower in China. There is still a lot of progress to be made here.

Pig price down
The Chinese pork price has been in free fall since January. In roughly 3 months, the quotation for live pigs has fallen by around 50 cents to below 2 euros per kilo. The downward trend is expected to continue in the coming months. If the trend continues, an end to the profit cycle is expected in 2018.