May 19, 2020


New Hope Group projects China's swine output recovery next year


Liu Yonghao, New Hope Group chairman said swine prices are also set to drop with the establishment of many new swine farming companies, reported Reuters.


China had introduced several new measures to boost swine production in the country after its massive herds were decimated by an African swine fever (ASF) outbreak.


Liu said pork prices will stay at high levels this year but could fall below production costs in the future as new companies from real estate and internet sectors join the farming industry.


In an online briefing, Liu said these companies will invest heavily, boosting swine output. This will lead to an oversupply and eventually drop prices to under production costs.


No company names were mentioned. One of China's major real estate companies China Vanke Co Ltd had published a job advertisement for a swine farming unit manager recently.


The big swine production players have also expanded, such as New Hope Liuhe, the group's swine breeding business.


New Hope Liuhe sold 3.6 million swine last year, aiming to output 15 million swine in 2021 and 25 million by 2022. 8 million swine are set to be slaughtered by the company this year.


The New Hope Group chairman said the company is prepared for prices to fall, with its production costs only at 11 RMB / kg (~US$1.55; 1 RMB = US$0.14).


Liu estimated pork prices will keep dropping this year due to added production and boosted imports. Prices have been steadily falling since February.


Live swine prices fell 30% between March to May, reaching below 30 RMB / kg (~US$4.22) as heavier swine kept in backlog have finally been sent to slaughter. Processors were closed between February and March 2020.


Analysts said prices are also falling because of lower consumption, as work and school canteens remain closed.


Liu added that the company will push its Australian food and farming investments, even though there is a dispute between both countries. China had recently suspended meat imports from Australia, with one company owned by New Hope.


-      Reuters