n a stark development for China’s live hog market, prices plummeted nearly 7% on Monday, marking the most significant weekly decline in 2023. Analysts attribute this sharp downturn to the emergence of fresh disease outbreaks, prompting farmers to hasten the slaughter of pigs in an already oversupplied market.
Data from Shanghai JC Intelligence Co Ltd reveals that prices hit 14.06 yuan ($1.92) per kilogramme, the lowest point since late June, underscoring the severity of the situation in the world’s leading pork market.
Analysts from Huachuang Securities pointed to “concentrated selling in some areas due to the impact of swine diseases” as a key factor in this decline. Farmers, grappling with the threat of diseases like African swine fever (ASF), are opting to cull their herds preemptively to prevent further infections—a move that depresses prices further.
ASF, though not harmful to humans, wreaked havoc on China’s hog herd in 2018 and 2019 and has since become endemic, particularly spiking during the winter months. While farms typically do not report outbreaks, there are indications of a rise in cases, with some industry insiders suggesting a recent intensification of the disease.
The Ministry of Agriculture and Rural Affairs has yet to comment on the situation, leaving some uncertainties about the scale of the problem. Recent disease outbreaks are described as “continuing to ferment,” as noted by Hua’an Securities, with the price of culled sows hitting a two-year low.
Chinese pig producers are facing a challenging year, struggling to turn a profit as supply significantly outpaces demand. With 42.4 million sows recorded at the end of September—3.4% higher than the “normal level”—and an improvement in the production efficiency of sows, the oversupply issue becomes more pronounced.
Despite a brief rebound in August, hog prices resumed their descent in late September, a trend contradictory to the usual peak consumption period over winter. Analysts suggest that the industry might be approaching a “cash flow inflection point,” leading to accelerated efforts to reduce overcapacity. Cash flow remains tight across the industry after three consecutive quarters of losses for many breeders.
As China’s live hog market grapples with the dual challenges of disease and oversupply, finding a delicate balance between supply, demand, and effective disease management becomes increasingly imperative for the industry’s stability.