Lyle Jones, Director of Sales, China
The price of slaughter pigs in China have broken 20 yuan/kg ($1.27/lb.) after two years of depressed prices following irrational expansion after the ASF outbreak. According to the pig price index of Xinmu Network on June 11, the national average price has reached 19.3 yuan / kg and the average price in Jiangsu and Anhui has reached the 20-yuan mark ($1.27/lb.) liveweight!
Pig prices in 17 provinces across the country have risen across the board. Headlines on online media indicate the market is hot and the industry is at a boiling point. Due to significant liquidation of sows from recycling disease outbreaks, or simply financial distress, domestic supplies have tighten and prices soaring. Often seen as a barometer for the future, the price of 7kg weaned pigs have skyrocketed from 175-yuan ($24) back at this time in January to 750 yuan ($103) June 12th. This quadrupling in price in just 5 months period of time have producers more and more optimistic about the future. According to Xinmu.com, the new pig price index on June 11, 2024, was 125.12, an increase of 1.42 points from yesterday. Given the fact that no one pays more than they have too, we too believe there is much to be optimistic about in the China market for the foreseeable future.
According to the Ministry of Agriculture and Rural Affairs, the number of sows has decreased 6.9% year on year to 39.86 million. Our opinion based upon 17 days of travel in May to attend CAHE in Nanchang and visit clients in China, is that those numbers are based upon capacity- not actual inventory. Our contacts in the field tell us of significant farms sitting idle and many running at 50-60% capacity. The pig production capacity has been reduced for 15 months and has been at a low level since 2021.Noone can argue that actual production output has been pulling back for 5 consecutive quarters.
As result of the obvious shift in supply and demand, some industry analysts are predicting prices to surpass 24 yuan/kg ($1.50/lb.) liveweight for slaughter pigs and 1000 yuan each ($140) for 7kg weaned pigs. Back in January, Genesus predicted based upon our observations that China slaughter pig prices would hit 20 yuan by July- it happened even earlier than we thought. Based upon the severity of the pullback and 10 months production cycle, we would not be surprised to see live slaughter pig prices exceeding today’s 24.60 yuan/kg national average wholesale price of pork by October.
Another indication of this inflection point in the China Hog Market is the recent announcement by *ST Zhengbang that their application for revoking the risk warning of the company’s stock trading delisting has been approved by the Shenzhen Stock Exchange. The company’s shares will resume trading on June 12, and the abbreviation will be changed to “Zhengbang Technology”. It was only one year ago that the risk warning was imposed, so no doubt this is a sign that fortunes have turned not only for Zhengbang, but the entire industry.
The Swine Industry have faced many headwinds over the couple of years affected by ASF outbreak, Pandemic, Geopolitical, military conflict, inflation and low markets, but by nature pork producers are resilient. Just last week Genesus exhibited at the World Pork Expo in Des Moines. We were very pleased to have received so many producers from China and all over the world for tasty pork, good conversation and sharing industry insights. We tip our hats to all producers who have survived these challenges and look forward to a bright future and even stronger local presence in the China Hog Marketplace.
