Inside Pigs
Panic sales due to sharp drop in Chinese pig price
The unexpected and sharp fall in the Chinese pig price is hitting pig farmers in China hard. In combination with high feed prices, this results in panic selling of pigs by farmers. The Chinese government is calling for continued production.
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The government Commission for National Development and Reform (NDCR) asks pig farmers to maintain production levels, despite the fact that returns are under pressure. The government made the call after one of its return indicators for pig farming (pig price/grain price ratio) fell below 1:6. At that point, it is no longer possible for many pig farmers to operate profitably.
Government intervenes
Without revealing what exactly it entails, the NDCR reports today (June 16) that timely action is being taken to ensure that the pig price makes a reverse movement. Officials are also closely monitoring the development of pig production and pig prices. The average price for live pigs fell even further this week and is about 60% lower than at the beginning of the year at a level of €1,89 per kilo of live weight.
According to a Rabobank analyst, the market is characterized by panic selling, she told Reuters. Panic selling sets off a chain reaction that worsens the situation. The analyst does not think that pig farmers will respond en masse to the government's call and calls a shortage of supply in the second half of the year 'probable'.
According to the NDCR, there are a number of causes for the current drop in prices: farmers offering heavy pigs en masse, increased pork imports and traditionally weak demand at this time of year. The NDCR did not say whether pork buying to support prices has already begun. Last week it was announced that this procedure is on the plan.
Chinese government figures show further growth in pig herds
Chinese state media also announced new figures on the size of the pig herd today (June 16). According to this data, the pig herd was 23,5% larger in May than in May 2020. The number of sows grew by 19,3%. A spokesperson for the Ministry of Agriculture said it can now be said with "complete certainty" that the rebuilding of China's pig herd following the catastrophic ASF outbreak in 2018 has been completed faster than planned.
Interview
Went last week Boerenbusiness in conversation with Gert-Jan Gerrits from Agrifirm and Jan Cortenbach from De Heus about the situation on the Chinese pig market. You can read this interview .