When will there be a shortage in the Chinese pig market?

Although it is suspected that there will be a pork shortage in China, this has not yet occurred. Due to the outbreak of African swine fever, Chinese pig farmers are offering pigs en masse. This puts pressure on prices.

The Chinese pig price is even at its lowest point in years in mid-January (for this time of year). Converted to euros, the price is slightly more than 13 Chinese Renminbi (approximately €1,70) per kilo of live weight. Although this seems an acceptable level in European standards, by Chinese standards it is (far) below cost price.

Government replenishes meat supplies
The high slaughter figures naturally also mean that a lot of meat comes onto the market. A relatively large part of this is currently being purchased by the Chinese government, which wants to fill their reserves. The reason for this is to (partially) absorb a possible price peak in the event of a shortage of pigs.

In doing so, China probably also wants to prevent prices from rising to great heights, as happened in 2016. This causes social unrest and the government wants to prevent this at all costs.

Tightness from the second quarter
However, the question is to what extent Chinese (meat) stocks can absorb a possible shortage, because a tighter pig supply is likely in the long term. The Chinese Ministry of Agriculture recently reported that the pig herd has shrunk by 5% and the number of sows has even fallen by 8%.

The CEO of Danish Crown, one of the largest exporters of pork to China, expects the pig supply to become tighter from the second quarter. In the short term, he believes, sales opportunities to China are still limited due to the high slaughter numbers. Vion also announced this this week. However, the CEO predicts a turnaround from the second quarter.

Influence of African swine fever
If the pig supply actually becomes tighter, it will probably take some time before the shortage spreads to the meat market. This is because of the stocks that are now being built up; in China, but European slaughterhouses are also currently freezing a lot of meat. 

China expected that pig prices will pick up in the second half of 2019. The Chinese pig price has a clear seasonal pattern in most years. Historically, pig prices are under pressure until April/May, after which a recovery usually follows.

All in all, it remains to be seen how the situation in China will develop. Especially because the outbreaks of African swine fever have a major impact. So far, outbreaks have been reported in 24 provinces and more than 900.000 pigs have been culled.