February 5, 2007

 

Disease and corn drive China pork prices to record-high

 

 

Even before the year of the pig arrives in February, widespread hog disease in China has caused the death and slaughter of millions of pigs, aided by high corn prices are pushing pork prices to rise to record highs.

 

Over the past six months, pork prices in China has reached record levels, according to Reuters.

 

A highly contagious disease, a variation of the Porcine Reproductive and Respiratory Syndrome virus, or PRRS has afflicted millions of pigs in diverse regions across China, Reuters reported.

 

The disease first appeared in Jiangxi province in May last year and has spread to many other areas. 

 

What has made the highly contagious disease more difficult to contain is that there is as yet no effective vaccination against the disease, Jing Jizhong, deputy secretary-general with the China Animal Agriculture Association said.

 

Although China has not released figures on the number of animals affected by the disease, industry estimates vary between 5 million and 30 million pigs dead since May last eyar.

 

Mortality can rise to as much as 50 percent at small farms while in typical farms it is between 10 and 20 percent, Jing said. 

 

January's pig prices were up 40 percent in January compared with 2005, mainly due to the shortage of pigs and high corn prices. 

 

The high prices coincides with the peak period of China's pork consumption during the Lunar New Year, which falls in mid-February this year. Officials are saying that it is actually the high demand during the festive season that is causing the price increases.

 

However, according to one official with the China Feed Industry Association, even though China has outbreaks every year, last year's situation was more serious, particularly in the southern areas.

 

China has been intensifying efforts to crack down on illegal meat as it was feared that farmers who were not compensated for sick pigs would sell the meat on the market. In fact, unlicensed meat sellers have been popping up over the past year, where sales were conducted at night instead of the morning market hours. 

 

The pig shortage is affecting the industry for soymeal this year as some big state farms have reduced the numbers of hogs they are raisng by 10 percent this year.

 

Although the number of outbreaks has dropped to its lowest since the outbreak, breeders are now waiting to see if the disease would spread further before investing further, Jing said.

 

The reluctance by breeders to increase the number of pigs would further hurt soymeal demand, which remained sluggish all of last year, analysts said.

 

Soymeal consumption is not expected to pick up until August or September, the peak breeding season, said Jing.

 

But prices for corn, the major grain used in feed, would still be supported by demand from the corn processing industry, analysts said.

 

The feed industry was likely to consume 1 percent less corn in 2007, a contrast to the 4 percent increase seen in 2006.

 

The decrease can be partially attributed to hog diseases, on top of higher corn prices, an analyst at the China National Grains and Oils Information Centre said.