Wider supply depresses Chinese pig price sharply

After the opening of the Chinese pig futures market in January this year, contracts for September delivery initially gained considerable value. New outbreaks of African swine fever (ASF) initially slowed the growth of the number of pigs in the country. With reports trickling in about accelerated recovery of the pig herd, and thus the pig supply, prices gradually fell. 

Large selection of heavy pigs
The most recent reason for the significant price correction is, among other things, a current wide supply of heavy animals. Analysts reported this to Reuters on Tuesday, May 18. The current daily prices for pigs have come under further pressure. It should be noted that it is traditionally not the strongest time of the year in terms of domestic pork consumption. This weak domestic demand is also currently putting pressure on prices. The daily prices for slaughter pigs have already been halved compared to the peak.

In addition to the increased supply, the production of pig feed in the country also appears to be increasing again. Analysts stated that feed production appears quite good. This would be at a higher level than both last year and last month. These reports fuel the idea that the recovery of the pig herd may be faster than expected. This has an additional depressing effect on the Chinese futures market for pigs.

Chinese ministry: stabilization of pork prices remains uncertain
According to the most recent figures, the sow herd in China is almost at pre-ASF crisis levels. In April, the sow herd would amount to 97,6% of the number of sows counted at the end of 2017. Despite reports of a strong recovery of the pig herd, there are still factors that could threaten a stabilization of the fattening pig market. The Chinese ministry warns that there have been reports of ASF this year as well, that high feed prices are putting pressure on the returns of pig farmers and that the current efficiency of the built-up pig herd is relatively low.