February 22, 2017
China Hog Monthly Review: Lukewarm pre-Chinese New Year hog market in January
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There was no sign of hog inventory recovery in January as sow numbers shrank. Breeder farms in China were reluctant to expand inventories as the country's economy stayed weak. Discarding more unproductive sows than gilts bought, breeder farms trimmed stocks over the month. Consequently, the quantity of piglet added to pens inched down 0.23%.
Despite pre-Chinese New Year stimulation, pork demand was weaker than expected. This cut release volumes, which was already constrained by low finishing hog supplies, by almost 2% compared with December.
Having fallen almost continuously for most of the past 2.5 years, hog inventories are down 11.3% from their 477 million head peak in July 2014. Following late January's Chinese New Year market peak, swine numbers should continue falling for at least another two months.
Increasing 4.66%, hog prices rose from December's RMB17.38/kg to RMB18.19/kg. This was 1.73% higher than in January 2016, when they cost RMB17.88/kg.
Despite the above mentioned price inflation, pre-Chinese New Year hog demand is usually much stronger and the market underperformed this year. With the hog population 2% to 3% lower than a year ago and consumers cutting chicken consumption due to bird flu fears, it is disappointing that hog prices increased less than 5%.
For farms with farrowing units, January hog farming costs rose 0.42% whereas profits jumped 14.15%.
Backyard farm rearing costs was down 1.74%, helping to lower its losses by 53.74% together with higher hog prices.