Market analysis

Many sows in major hog production regions were slaughtered during this year's first half, while natural disasters such as typhoon in July and August took a devastating toll on piglet stocks in the south's main hog production regions. This, coupled with the pig disease outbreaks of recent months, has led to low hog inventory levels during the second half of 2006.

The continued increase in corn prices has raised hog production costs, propping up hog prices.

Production of meat products including waxed pork products has kicked off in southern China in the run up to the Spring Festival (Chinese New Year) in February 2007, raising pork demand.

Many cases of Sudan Red, a carcinogenic food dye, have been found in duck and chicken eggs, while excessive quantities of carcinogenic drug residues were discovered in some aquatic products recently. This gave pork demand a further boost.

Market forecast

With continued tightness seen in near-term supply and currently higher hog production costs, prices should register more gains in the week ahead.