Analysis Pigs
Pig prices in China are picking up considerably
The Chinese pig price has risen considerably in recent weeks, after the low level of recent years. A lower target for the Chinese sow herd will soon bear fruit.
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In the last two years, Chinese pig prices have been too low for pig farmers to make a decent profit. An important reason for the persistently low pig prices was a strong supply. This put a lot of pressure on the market and there was also a lot of volatility. In the first months of this year, prices fluctuated between 14,35 yuan and 15,61 yuan.
Converted, this is a range of €1,83 to €1,99 per kilo. By our standards these are high levels, but not in China. Prices were still at a low level in March, although there was less volatility.
Production decline
The stabilization of the price is the result of a decrease in the Chinese pig herd. To prevent a recurrence of overproduction, the Chinese government decided last March to adjust the targets for the sow herd downwards: from 41 million to 39 million sows. This is to ensure that pig farmers can produce profitably by relieving the burden on the market. The lower limit of the measure is intended to prevent pig prices from exploding again, as happened a few years ago during the many outbreaks of African swine fever.
The country is now well on its way to achieving the targets. Regardless of the target, low pig prices have already caused a decline in the Chinese pig herd. In the period from October 2023 to March 2024, the number of pigs fell by 4,9%. Currently, China has reduced the size of its sow herd to just under 40 million.
Prices start to rise
Since the beginning of the second quarter, pig prices have increased again. More recent data from Chinese market agency Soozhu shows that the pig price has increased considerably in recent weeks. This data differs slightly from government data and is generally slightly more volatile. On May 14, pigs were traded for 15,04 yuan per kilo, according to the market bureau. On May 29, Soozhu recorded a price of 17,61 yuan per kilo.
This means that the Chinese plan to increase the pork price appears to be succeeding quite quickly, without the target having yet been achieved. The question that still hangs over the market is whether the Chinese government will succeed in stabilizing pig prices at a level acceptable to them. This is because the sow herd should actually decrease by roughly 1 million sows.