Market analysis

The sugar and liquor product fair in Sichuan lent support to local pork demand. Thus, hog prices in areas around the provincial capital Chengdu slightly improved, with more significant gains seen in prices of domestic cross-breed lean hogs.

In other major hog production regions, hog farmers who needed cash to enhance facilities and land continued to lower prices to clear inventories. Slaughterhouses and meat processing enterprises only made procurements when necessary, and planned to make downward price adjustments.

As most slaughterhouses preferred procuring native mixed-breed hogs and native dual-breed hogs, prices of better quality lean hogs fell.

However, hog prices in Henan province were relatively stable. Due to only narrow differences in hog prices between regions, more hogs were delivered from Henan to only nearby Hubei province, lending some support to hog prices in Henan. Local slaughterhouses were only prepared to buy small quantities at lower prices.

Market forecast

With domestic live hog prices falling to such low levels, farmers in major hog production regions nationwide made significant losses. Following continued clearing of live hog stocks by farmers over the past few days, the build up in hog inventories is expected to gradually decline.

However, with no pick up in pork demand seen anytime soon, live hog prices in China are expected to continue moving lower in the near term.

Source: eFeedLink - 29th March 2006