Construction stop at Chinese pig integrations

Two medium-sized pig companies have confirmed to the Reuters news agency that they will temporarily halt their expansion plans. This is because the pig price provides little insight into returns. The pig price in China has fallen by approximately €0,50 since January, converted into euros, to €1,41 per kilo. That is almost half the price quoted in June 2016. Approximately €25 loss is incurred per finishing pig delivered.

Feed raw material prices in China have also risen again since January, which means that the margins are cutting on both sides. The feed price is a factor that should not be underestimated as it accounts for 2% of the costs. Due to the negative margins, integration has Chongqing Riquan Animal Husbandry decided to stop the construction of 5 new sow stables. The initial intention was that approximately 2019 additional sows could be housed from 60.000. Yin Pingan, chairman of the integration, says that he wants to see the price development first before production is further increased. Other integrations also have these thoughts. 

Sows to slaughterhouse
It is not only the integrations that are responding to the low pork price. For example, smaller pig producers appear to slaughter sows because the piglets yield too little. This story corresponds to the current situation on the Chinese pig market, as there is a very wide supply of heavy pigs.

According to Pan Chenjun, analyst at Rabobank in China, demand cannot keep up with growing production. In recent years, a lot has been invested in Chinese pig production, while consumer demand has stagnated. Production is also on the rise elsewhere in the world. This is how the pig herd in the United States is progressing record upon record. It is also increasing in the European Union number of pigs toe.  

Price decline continues
Due to growing production in China, the need for imports is decreasing. This is reflected in the price development elsewhere on the world pig market. In the United States, the pork price is 29% lower than a year ago; the Canadian pork price has fallen by 21%, while the pork price in Brazil has lost as much as 39%. The average pig price in the European Union is the least unscathed, with a decline of 10%.

The falling pig prices in the above-mentioned countries once again underline the Chinese importance in the global pig market. It is expected that the pig price in China will remain under pressure, now that producers are coming up with supplies en masse. It can be concluded that Chinese support for the price of pork, including in the Netherlands, has crumbled considerably.  

The Chinese pig price has fallen sharply and the decline is expected to continue.