Pig prices recover in China

After 6 months of continuous decline, hog prices in China stabilized at $2.40 in July. The average price is slightly above the levels recorded in July 2018, a month before the first outbreak of ASF in the country. Meanwhile, official reports say China's pig population has fully recovered to pre-ASF levels.

According to the Ministry of Agriculture (MARA), the number of sows in June amounted to 45.64 million heads, which is 9.34 million heads more than in the same period last year. The number of pigs sold to the market amounted to 337.42 million heads, an increase of 86.39 million. However, MARA also reported that in July, for the first time in 21 consecutive months, the number of sows actually decreased by 0.05%.

The recent expansion of large pig farms has apparently created overcapacity in the industry. Some sources say that by 2021 production could reach 688.63 million head compared to 2017. There are currently 376,500 pig farms in China.

“Since the beginning of the year, pork prices across the country have fallen sharply, causing widespread concern among producers. Consequently, many companies are reviewing their plans and making changes. We've seen companies sell divisions and make changes to senior management. .

Production costs have increased due to high debt due to recent expansion, high grain prices and a tight labor market. Producers are estimated to lose $35 to $50 per pig or more. For any company with one or 10 million pigs, such losses cannot go unnoticed.  

It is interesting to note the rise of global mega-producers within China . Before ASF, there were only two mega-producers producing 10 million pigs per year. By the end of this year, their number could grow to 4-5 if their planned expansion is realized. Accordingly, by the end of the year there could be more than 10 global mega-producers, each with more than 1 million sows,” said Lyle L. Jones, director of sales for Genesus Inc. in China in its latest market report.

However, the future of Chinese pig production is still uncertain as ASF continues to threaten the national pig herd due to new viral mutations reported earlier this year and poor breeding performance.