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Insufficient Piglet Supply in China Drive Prices Up

by 5m Editor
10 June 2004, at 12:00am

CHINA - The current development of hog production in China is evidently manifested in the prices of piglets. High enthusiasm for hog farming has led prices of piglets in China to rise sharply in recent period.

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A survey conducted between January and June 2004 in Luzhou area of Sichuan province and Taigu area of Shanxi province showed that prices of piglet were rising sharply from January to late April. The bird flu outbreak early this year, which negatively affected the demand for poultry products, has helped boost the demand for pork in the Chinese market. As profit for hog farming was attractive, demand for piglet boomed when initiative to increase hog inventory was raised among Chinese hog farmers.

Sow inventory dropped, as they were eliminated by many Chinese hog farmers during the SARS period in 1st half 2003. When prices of poultry products rose significantly and profit of hog farming increased during the period of August and September 2003, hog farmers then started to pay attention to sow inventory. The ablactation of piglets produced by the August-September 2003 batch of sow will be after August or September 2004. Before this period, piglet supply will not be enough to meet demand.

In 2003, the mouldy corn phenomenon was more severe than the past in China's major production regions. This has negatively impacted sow reproduction and supply of piglet, resulting in a shortfall of piglet supply.

During the later half of April 2004, although prices of piglets dropped, they were still maintained on the high side. This was due to the high prices of feed ingredients which have driven up production cost and thus adversely affected farmers' interest to increase hog inventory. With the drop in demand, the demand-supply imbalance eased temporarily then.

By the end of May, prices of piglets have risen strongly, with the potential of further increase seen. Between end May and early June, piglet prices in Luzhou area of Sichuan province have registered a new high record of above RMB8/kg, while those in Taigu area of Shanxi province were again closed to RMB20/kg. Additionally, the significant price drop in feed ingredients also raised farmers' interest in hog farming. This has resulted in insufficient piglet supply to meet demand.

Overall, there is still a big gap in the shortfall of piglet supply in China. Chinese hog farmers' inventory levels are currently low. The volume of slaughtered hogs and overall hog inventory in China are probably not as optimistic as the relevant authority has indicated. As long as the shortfall in piglet supply remains, hog inventory would fail to increase. The demand for hog feed will not increase considerably as a result.

Source: eFeedLink - 9th June 2004

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