Something is happening in China!

Something is happening in China!
Photo is illustrative in nature. From open sources.

We have been writing for several months about the huge financial losses in the Chinese pig industry . CHINA slaughters about 12 million pigs a week, and the average loss of $30 per HEAD over the past 18 months is likely low. At 12 million head per week, a weekly loss of $360 million over 18 months would be about $27 billion . The Chinese government estimates that the sow population fell 7% year on year, which is nearly 3 million sows fewer than last year.

When you have fewer sows, you have fewer pigs. In January, piglets in China cost 20 US dollars. Last week, prices for piglets in China reached 700 yuan or $100 each. The current profitability of piglet production is estimated at 450 yuan or 65 US dollars. We always operate on the basis that no one pays more than they have: $20 to $100 is a true reflection of supply collapse.

Current piglet sales are from pigs raised 5 months ago. Keep in mind that China's sow population has been steadily declining over the same period. There is more than a high chance that pig production will decline even further.

As supply in the Chinese pork market tightens sharply over the next few months, higher prices will pull pork out of all exporting countries, supporting domestic prices in each country. 

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