Normally, this is a time when the demand for pork increases and hog prices reach their peak for the year. Consumers are busy stocking up on their beloved pork for family gatherings while producers enjoy higher prices and extra profits during the holiday season and beyond. However, the chart below paints a different picture:
Pig prices were relatively flat until ASF emerged in 2019, and markets jumped to record highs. Despite reoccurring waves of ASF, producers enjoyed huge profits spurring rapid expansion in 2020. The result was a rapid decline in pig prices in the first half of 2021 to below costs of production. The market has been struggling to recover ever since, as producers deal with low prices, disease, and rising feed costs.
Last Friday, January 7th, the slaughter pig market closed at 15.23 yuan/kg ($1.08/lb.) down from 16.48 yuan/kg ($1.17/lb.) just one week prior. At the same time, many feed companies are posting new pricing increases of up to 100 yuan ($15.73) per ton. The combination of low pigs prices and rising feed costs means that losses are running in the neighborhood of 500RMB ($78) or more per head.
Culled sow prices continue to soften to 9.9RMB/kg ($0.70/lb.) from 10.71RMB/kg ($0.76/lb.) the week prior. Obviously, there are plenty of sows going to slaughter whether planned to upgrade genetics, get rid of a disease problem, or raise cash to pay bills. One contact in China told us last week “ASF doing very well this winter”. Others, report many trucks on the roads with sows or noticeably light market hogs.
There are a great deal of mergers and acquisitions going on as some producers run out of money and others see an opportunity, contributing to industry consolidation. Companies that survive, many are looking to vertical integration with lines of branded pork adding value and profits. At the same time, consumers have more disposable income and are more discriminating as e-commerce grows.
High-Quality Breeding pigs with superior meat quality will play an important role in the strategy of any company to become a leader in the high-end food supply. Only Genesus has more than 20 years of R&D focused on meat quality. Genesus cooperates with select super nucleus farms within China under its global genetic program to supply tasty pork to the domestic market.