Market analysis

Lower hog prices continue to discourage raisers from replenishing piglet inventories. Some raisers were unwilling to sell their hogs as prices have stayed weak. Meanwhile, others have sold hogs and cash returns were mostly used to buy farming tools and other goods in preparation for the spring sowing season.

Meanwhile, higher temperatures in recent days have boosted the survival rate of piglets. Worried that this could boost supplies of hogs in a few months time and could further dampen hog prices also led raisers to cut back on piglet buying.

During the week in review, piglet prices in Henan and Hebei provinces were stable on limited transactions. Higher hog inventories and lower hog prices had affected demand for piglets. Sow raisers were mainly keeping their piglets for breeding in farms.

In the provinces of Shandong, Hubei, Hunan, Jiangsu, Guangdong, Sichuan and Guangxi Zhuang Region, piglet prices were lower. Hog raisers continued to incur losses and most of them were reluctant to sell their hogs at low prices. This has affected piglet purchasing activities in these provinces.

Better piglet survival rates in the warmer spring season--which means an increased supply of piglets--has also dampened piglet prices. Middleman who arranges business transactions between commercial pig breeders and individual hog raisers did not conclude any deals during the week in review.

Significant gains in corn prices and steady hog feed prices mean that hog production cost will remain relatively high. This has also affected buying interest in the piglet market.

Market forecast

Losses incurred by hog raisers, increased supply of piglets and higher feed costs are likely to dampen demand for piglets in China. The weak demand situation is likely to persist in the next few weeks.

Source: eFeedLink - 24th February 2006