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Genesus Global Market Report: China Market Report, Sept 2018

20 September 2018
Genesus - The first power in genetics

We just returned from 2 weeks of travel within China.

By Lyle Jones, Director of Sales in China, Genesus Inc.

While the Swine Industry continues to transform from its old style backyard production to new and modern facilities with better Genetics and higher technology, there is growing concern over recent outbreaks of ASF. Just yesterday, we noticed this announcement from the Ministry of Agriculture:

“Since the first African swine fever epidemic in China on August 3, there have been 15 epidemics in six provinces. On September 11th, in order to cut off the transmission chain of African swine fever virus and reduce the risk of cross-regional spread of the epidemic, the Ministry of Agriculture and Rural Affairs announced that 10 provinces adjacent to the provinces where the African swine fever epidemic occurred in Hebei, Shanxi and Inner Mongolia were suspended from inter-provincial transportation. At this point, pigs in 16 provinces were prohibited from inter-provincial transportation.”

These growing and more frequent reports are affecting producer’s actions and also market conditions. We are being told that many farms are locking down and not allowing their people out nor outside people in. Bio-security has long been a challenge in China and now owners and managers are taking unprecedented steps to protect their facilities from contracting this devastating disease.

Who knows how long farm workers will be content under these lockdown conditions, but many farms are now providing housing, cafeteria, laundry and even barbershop services for their workers. Many farms are becoming almost like small communities with all the comforts of home and even recreational facilities. So they may be able to withstand these conditions for some time.

However, local markets are reported to be very volatile as no pigs can ship to a naive province from any of the provinces infected with ASF. Nor can pigs be transported from the province of the neighbour of the infected province. That had caused a big variance on hog price from the province to province. Looking at the attached map from the announcement, the red is infected province and the blue is their neighbour as.

Thus, supply and demand within each providence is affecting market hog prices. Those provinces within restricted zones may experience shortages of pork and increasing prices in the marketplace. Slaughterhouses within restricted zones may have trouble filling shackle space.

Quarantine zones have been established causing transportation of out of these regions to come to a halt. Thus pork supplies may become land locked within these effected areas causing over supply within quarantine regions and prices to drop. Conversely, there may be shortages in the many large cities within China and sharply increasing prices.

Live markets will also be closed in the effected regions, according to a notice by the Ministry of Agriculture and Rural Affairs dated Sept. 11 and sent to animal disease control centers in the areas. The affected areas include the provinces of Hebei, Shanxi, Jilin, Fujian, Jiangxi, Shandong, Hubei and Shaanxi as well as the Inner Mongolia Autonomous Region and the city of Shanghai.

Provinces such Hubei and Jiangxi are major exporters of pigs, and will likely see prices fall. However, importing provinces such as Guangdong and Zhejiang will see rises in prices. For example, prices for live hogs in Zhejiang were 18.51 yuan per kg (US $1.2 per pound) last week, well above the national average of 14.38 yuan (US $0.93 per pound). However, it is reported prices in Liaoning, meanwhile, fell to less than 12 yuan per kg (US $0.80 per pound)

These government measures are expected to hit small farmers hard who sell their animals to live markets. Even if prices are up in those regions, the farmers won’t be able to sell there pigs if the live markets are closed. To make matters worse, these are unchartered waters in China and no one knows how long these conditions will last.

However, adversity in one area, usually creates opportunity in another. Look for consumer sentiment in China to shift to sources thought to be safer and healthier. We would expect pork prices to increase from countries free of ASF while filling the void that likely will occur from demand in China and other Asian countries.

 


To find out more about Genesus Genetics, please take the time to visit their website at www.genesus.com .



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