Market analysis

Key characteristics of China's piglet market during the week under review were as follows:

Piglet replenishment activities had continued to pick up in Guangdong, Guangxi, Sichuan, Hebei, as well as in areas of Hunan province unaffected by pig disease.

In the course of the week under review, pig disease outbreaks in parts of Hunan had actually dampened prices there. However, prices soon stabilised after authorities there brought the outbreak under control.

In Sichuan, rainfall in the past few days had helped to cool regions affected by a dry spell recently. Piglet replenishment activities had thus picked up in the province.

Hog raisers were more active in buying piglets as most of them were low in hog inventories. Recent improvement in hog prices had also enabled more raisers to return to the black, which had helped to boost their interest in buying piglets. Profits from selling a head of hog range currently range from RMB50 to RMB150.

By making piglet replenishment during this period (late August to September), piglets would have fattened sufficiently to be sold as hogs during Spring Festival (Feb 18, 2007). As higher festive demand normally drives up prices of hogs, raisers are hoping to boost their profits next February by taking up piglet supplies. Despite improving market fundamentals, analysts cautioned that pig disease will remain as a threat. Although the situation is being brought under control in affected areas of Hunan, outbreaks might occur again.

Analysts say that in the earlier period, cash-strapped hog raisers may not have put in place measures to beef up their herds' immunity to pig diseases, and there is thus a likelihood that such diseases may recur again.

Market forecast

During the week in review, piglet replenishment activities in China had continued to rise. Improvements in hog market fundamentals, coupled with expectations of better hog profit returns in the Spring Festival next year, will continue to fuel buying interest in China's piglet market in the week ahead.

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