Genesus Global Market Report China
By Lyle L. Jones, Director of Sales for China, Genesus Inc.
China’s all-important Spring Festival has just passed and pork producers are looking forward to better times in the Year of the Tiger.
On the last trading day before the holidays, all listed pig enterprises released their performance forecast for the past year. According to the statistics from Xinmu, only 5 of the 18 listed pig companies were profitable in 2021.
The same public report indicated total losses of 42.4 billion yuan ($6,661,040,000.00) for the listed companies, with 8 of them, in one year lost all profits of the past three years 2018-2020. It’s really hard to even imagine the magnitude of those kind of losses in our industry.
China Top 20:
ASF has changed the structure of the industry in China. Prior to the outbreak, in August 2018, Wens was ranked #1. However, since 2020, Muyuan has taken over the top spot, with 4 other World Mega Producers: Muyuan, Zhengbang, Wens, and New Hope dominating. In 2021, 7 new companies have taken the place of others who have dropped off the list.
The total number of pigs reported by the top 20 has now doubled from 67.7 million in 2018 to 140 million in 2021. Of those 140 million pigs’ production, 60% are reported to be from Feed Companies.
According to www.zhu.com, the production cost of the top listed companies has decreased in 2021, but is still higher (15-22 RMB/kg or $1.07-$1.57/lb.) than the average cost by family farms. Well managed small and medium producers can still compete, but the Mega producers have the advantage of access to capital to survive the times.
Current Market Prices:
Friday 4 February, the slaughter pig price closed at 14.12 RMB ($1.00/lb.). As the chart indicates, there was a sharp decline in prices in the first half of 2021 and the market has been struggling to recover since. One can see prices were trending upward in October but have flattened. At the same time, 15 kg (33lb) weaned pig prices closed at 395 RMB ($62.25) each.
Outlook for 2022:
Most of what one reads suggests prices are not expected to change much in 2022. However, we have a different outlook. We believe all those sows we have been reporting shipped to slaughter starting back in July (and since) will not be producing pigs. Those missed farrowings shall result in fewer pigs going to slaughter. Some say that those sow slaughtering were planned upgrades, but we suspect most were actually due to re-occurring ASF outbreaks and the need to raise cash.
As they say, the surest cure for low prices is low prices. We look for better days in China’s pork industry, with signs of improvement starting in the second quarter.