Market analysis

Severe flooding in central China and storms hitting coastal regions of late have significantly disrupted hog operations in those areas.

The floods have also damaged transport systems in northern and southern regions, hindering hog sales and deliveries. Consequently, hog prices in Guangdong province rose significantly during the later part of the week in review on reduced hog deliveries from northern to southern China.

Meanwhile, the floods have pushed up vegetable prices in affected regions, leading to improved pork demand.

Based on official statistics, live hog inventories in various regions during the first half of this year have fallen by between 6 percent and 13 percent from the same period last year. With relatively few hogs currently released into the domestic market and the rise in pork demand, China's hog prices have been given a boost.

Transport difficulties have led to few cross-province deliveries from major hog production regions to the main hog consumption regions, prompting domestic meat product businesses to cut down on hog procurements.

Additionally, increased uncertainty over near-term price direction in some regions further dampened hog procurements by local meat product businesses and slaughterhouses.

Market forecast

The recent weather conditions mainly accounted for the rise in China's hog prices during the past week, pushing up prices by a bigger margin in some regions compared with the previous week. Price quotes by domestic hog farmers have also differed significantly amid currently varied opinions on near-term price direction.

With the stormy weather cleared up and a further rise in temperatures by the close of the week in review, China's live hog prices are expected to extend gains at a slightly slower pace in the week ahead.