Price summary

Piglet purchases have declined in some regions following bigger-than-expected declines in hog prices early this week.

Concerns over pig diseases, with worsening situation reported in the north, had also led some hog raisers to shelf plans to replenish piglet stocks.

Market analysis

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

Hog prices in some regions of southern China (south of the Yangtze River) had registered sharp falls of RMB1.00/kg, or about 12 percent, early this week. This had resulted in sharp losses for some big hog raisers.

The sharp fall in hog prices, coupled with continued bans on piglet trade in parts of southern China which are still seeing pig disease outbreaks had affected buying interest in the piglet markets as well.

Analysts say that the higher supplies of hog had caused prices to weaken. Hog raisers in southern China had incurred a loss of some RMB100 per head of hog, which is about half the cost of a piglet. With such heavy losses, raisers' interest in replenishing piglets had declined sharply.

Higher feed corn prices had also affected piglet buying interest this week. In Chenzhou (Hunan province), corn prices had increased by RMB90/tonne.

Meanwhile, piglets currently available for sale in the south were mostly below 10 kg in bodyweight. Traders' asking prices for these piglets were on the high side and hog raisers were generally not prepared to accept such prices. Moreover, the lighter piglet bodyweight also mean a longer fattening process, other than the higher cost of maintaining piglet stocks in winter.

Some hog raisers who had taken up piglet supplies in the earlier period were also showing little interest in buying piglets in the week under review.

Market forecast

With the recent drop in hog prices in southern China, coupled with the some weakness in prices in the north, piglet buying interest was affected for most of the week in review.

Towards the end of the week in review, hog prices have stabilised in certain regions. Should this hog price stability prevail in the week ahead, analysts say that it may help to restore buying interest in China's piglet markets.

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