Market analysis

The outlook for pork exports has improved. Although pork exports currently only account for a small fraction of China's overall pork production, it has risen gradually in the past year. Companies hoping to increase their profit from pork exports had started to take up more hog supplies. Prices of good quality hogs were thus higher in the past week.

The pig disease situation had worsened in parts of the main production regions. In some areas where many farms are located in close proximity, many hogs and piglets continued to succumb to the disease, sending the death rate to as high as 50 percent in some farms. Some traders were unable to secure sufficient hog supplies. Bigger hog producers had also raised their selling prices on the back of limited supplies.

Prices of macro feed ingredients such as corn and soymeal had continued to rise. In particular, farmers had to pay RMB100/tonne more for corn purchases while soymeal prices were up RMB20-50/tonne. Higher cost of production and lower hog inventories prompted farmers to seek higher hog prices.

Demand for meat, including pork, had also risen with the colder weather. Sellers at the wholesale markets reported improved pork sales and marginally higher prices compared with a month ago. Some consumers have also started to buy more pork as broilers have become increasingly expensive.

Market forecast

Overall, hog prices are seen to make more marginal gains with the emergence of favourable market developments. However, in regions where the pig disease situation is not brought under control, prices may be affected as local consumers may cut down on pork consumption.

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