Price summary

China's live hog prices stayed range-bound during the week ending Aug 28.

The outbreak of pig diseases has significantly impacted hog prices of late. Despite high temperatures, consecutive cross-province deliveries were made from epidemic-hit northern regions such as Henan to the south.

Market analysis

During the week in review, China's live hog prices continued to move within a narrow range on account of the following:

• Releasing live hogs for sale recently have allowed farmers to recoup some of their earlier losses or even make profits. However, most have been somewhat reluctant to sell their hogs at current prices in anticipation of concluding relatively more favourable deals during China's National Day holiday and Mid-Autumn Festival in October.
  
  On the other hand, farmers in the epidemic-hit regions have released hogs (including those with relatively milder symptoms) into local markets at a faster pace.
  
  
• Although the National Day holiday and Mid-autumn Festival is still quite some time away, currently positive market developments should provide some support to near-term pork demand. With the end of the summer break from school approaching, some meat product businesses have been actively negotiating deals for the supply of pork to schools.
  
  However, more aquatic products have been released into the market lately following the resumption of fishing activities, which has weighed on pork demand somewhat.
  
  
• Hog prices in regions affected by the pig diseases fell by a relatively smaller extent compared with the earlier period. Authorities in Hunan province have conducted strict inspections on local live hogs to ensure stable cross-province deliveries especially of better quality hogs from the Xiangtan area. Consequently, hog prices in Xiangtan were relatively stable during the earlier part of the week in review, before rising RMB0.40/kg at the close of the week.
  
  
• Hog prices were marginally higher in the relatively epidemic-free province of Sichuan. Although the drought there has ended amid increased rainfall of late, the dry weather earlier had pushed up local vegetable prices by 50 percent. This, coupled with reduced vegetable supplies, has driven up pork demand and hence hog prices there. In particular, deals concluded for foreign cross-breed lean hogs in Sichuan's Chengdu area were as high as RMB8.60/kg.

Market forecast

Meat product businesses have already started to stock up their inventories in preparation for the National Day holiday and Mid-autumn Festival, leading to increased hog procurement volume recently. While most farmers are currently reluctant to sell their hogs at existing price levels, the recent epidemics have heightened market uncertainty over near-term hog prices. Hence, China's live hog prices might stay range-bound in the week ahead.