Current situation of China's pig industry

Over the past few months, China's pork industry has suffered significant financial losses similar to those in the United States. Although the price of slaughter pigs in CHINA is higher than in the United States, production costs are also high. For many months, average losses exceeded $30 US/head. With approximately 12 million pigs shipped into China's domestic market each week, multiply that by losses of $30 US/head = $360 million in industry losses per week. This could not but lead to the elimination of the breeding stock of pigs.

According to the latest data from China's Ministry of Agriculture and Rural Relations, the country's breeding stock stood at 40.42 million sows at the end of February. Data shows the national herd fell by 242,000 (-0.6%) in February and is down 7.9% since the end of 2022 (3.1 million). The 242,000 decline in February indicates that liquidation is still ongoing.

We believe that the actual reduction in the number of breeding stock is greater than 3.1 million, as it is extremely difficult to monitor the activities of many small producers in China. But even if these data are correct, a reduction of 3.1 million sows is still a significant number, representing more than half of the entire hog population in the United States, the world's second largest hog producer. And it's only a matter of time before the situation escalates to the limit. We expect China's slaughter pig price to rise to more than $1.20 US/lb live weight ($2.65 US/kg) by summer, driven entirely by reduced pork supplies. This higher price will pull pork away from exporting countries and therefore support prices in the slaughter pig market in each of those countries. Pig breeding stock

in the United States Judging by official data, the slaughter of sows in the United States in February amounted to 274.1 thousand, a year ago - 239.9 thousand. More by 35,000. In January there were 20 thousand more than last year. In general, over two months the number of slaughter increased by 55,000 compared to the same period last year. A year ago, a USDA report

On the state of affairs in the pig industry on March 1, it was said that the breeding stock of pigs had decreased by 58,000 compared to December 1 (December 1, 6,204,000, and March 1, 6,146,000). Our simple calculations show that while the number of sows fell by 58,000 quarterly last year, the increase in slaughter by another 55,000 sows indicates that a total of more than 100,000 sows were sent to slaughter. We estimate that the March report will report a decline of 100,000 sows compared to December 1, 2023. The United States hog population would then be reduced by 350,000 sows from 6,252,000 on September 1, 2022, as Since then, the industry has suffered losses on average of about $30 US/head (according to our estimates, industry losses amount to more than $5 billion). And then: oh, magic – there are fewer sows in the industry.

Prices

We see that last Thursday the national average price was 82.88¢c/lb ($1.83 US/kg). This is the highest price we've seen in quite some time, but what's more interesting is that the average price seems to be rising every day, maybe not by much, but it's been a long time since the price has gone up day after day. If Iowa State University's estimate that the cost of production is about 88¢¢/lb ($1.94 US/kg) is correct, then the industry is approaching breakeven. It’s long overdue, but I’d like to make it clear: we don’t consider breaking even a big victory, the industry needs real profits.

For months, prices for small piglets in the American market have been falling, and sow producers who own sows have been losing a ton of money.


Both early weaned and finisher pigs are now about $10 US/head more expensive than a year ago. We believe this is a reflection of lower supply and lower feed costs. Feeder pig prices have been below last year's prices all year and more.

Summary

Prices as of last Friday's close:

National average carcass carcass price: 93.58¢c/lb ($2.06 US/kg).
National average price for Choice beef carcasses: $3.10 US/lb ($6.84 US/kg).

The difference in prices for pork and beef is simply huge. Beef is more than three times more expensive than pork. Both are red MEAT (although some in the pork industry have tried hard to make it “The Other White Meat”). Just imagine what would happen if the price of pork carcasses was only half the price of beef, that is, $1.55 US/lb ($3.42 US/kg) - a profit no matter how you look at it.

To make our industry more economically sustainable, it makes sense that we improve the taste of pork. Beef costs more because consumers are willing to pay for it as a positive eating experience. Does anyone really still believe that this isn't due to the beef's ability to provide better flavor? The grading system for beef, which indicates marbling, led to the availability of more and more prime carcasses, for which demand increased and the price increased.

We cannot continue to do the same thing year after year and still expect a different result. Pork has lost its price and market share. We need a revolution. A revolution in the taste of pork.