January 22, 2024

 

Low prices, slow demand may further upset Chinese pork producers' profitability

 

 

The demand for meat in China has been slow to pick up even as Chinese New Year approaches on February 10.

 

Abundant live pig supplies have caused a further drop in slaughter pig prices at the beginning of 2024, leaving pork producers unable to cover their production costs. The oversupply is also increasingly affecting China's import demand for pork, as reported by Agra Europe.

 

The current meat demand among the Chinese population is subdued, leading market analysts to predict a continued decline in slaughter pig prices due to the surplus of live pigs. In the second week of January, the national average prices fell below ¥14 (US$1.96) per kilogramme of live weight, reaching ¥13.80/kg (US$1.93) according to the national survey on January 9. This represents a nearly 10% decrease from the already modest levels seen in early January 2023.

 

Currently, slaughter pigs in China are fetching barely more than in Spain or Germany. In previous years, slaughter pigs in the country were paid significantly higher prices.

 

However, Chinese private pig farmers and even large commercial enterprises continue to incur losses as the pig prices fail to cover their production costs.

 

According to calculations from the Beijing agricultural department in November 2023, losses for smaller farms amounted to around US$19.58 per fattening pig, while losses for publicly listed major corporations were lower per animal.

 

China's sow inventory has continued to decline, according to the Ministry of Agriculture. The latest available data in November 2023 showed a total of 41.58 million sows, which is 2.3 million or 5.2% less than the previous year.

 

Despite the ongoing decline in sow numbers, the pig supply has not diminished as the productivity of mother pigs has noticeably increased, and the expansion of the breeding sow inventory until November 2022 continues to have an impact.

 

China's Ministry of Agriculture reported a significant increase in pig slaughters from January to November 2023, with a total of 303.9 million pigs processed by slaughter companies handling over 20,000 animals annually. This represents a 19.4% increase compared to the same period the previous year.

 

The surplus is also curbing China's import demand for pork, which decreased by 6.3% to 1.46 million tonnes from January to November 2023, after initially increasing in the early months of the past year.

 

- Swineweb