Price summary

Slight gains in hog prices in some regions have helped to lift piglet buying interest.

Market analysis

Key characteristics of China's piglet market during the week in review include the following:

In Sichuan, Hunan and parts of Henan province, more farmers were restocking piglets. In Sichuan, prices of foreign crossbreed piglets have risen by RMB1.00/kg to RMB8.00/kg and sellers were temporary out of stock on active buying during the week in review.

In Hunan, the pick up in piglet buying activity was somewhat affected by floods towards the end of the week in review. Some hog farms were destroyed and piglet restocking activity began to slow down a little, while piglet deliveries to other provinces had to be suspended. Piglet prices tapered off slightly but managed to retain earlier gains.

In Zhumadian, Henan province, piglet prices were also higher on increased buying by farmers.

Overall, piglet demand in China had remained lacklustre as more loss-incurring backyard farmers continue to give up on raising hogs. Some small and medium-sized farms have also slaughtered some of their sows, while breeding only some reserve sow stocks for future reproduction. These farm owners were generally not interested in expanding their herd numbers.

The cost of fattening hogs form a major component of total hog production cost. Given that feed corn prices had stayed high, analysts estimated that hog prices have to rise by RMB0.40/kg from current levels before raisers can bring in profit. At current prices, most hog farmers could only manage to breakeven at best. Most thus do not intend to restock piglets on profit concerns.

Market forecast

In the week ahead, piglet prices may continue gains in some regions if demand picks up. Overall piglet buying interest in China is, however, unlikely to increase much.