June 17, 2011

 

China's hog inventories show recovery in May
 

 

Chinese breeders moved in May to rebuild hog numbers after low stocks coupled with rising breeding costs pushed the country's pork prices up to record highs this week and contributed to food price inflation.

 

Hog stocks in the world's largest consumer and producer edged up 0.8% by the end of May, compared to April, the agriculture ministry said, citing a survey over 2,000 major hog farmers.

 

"A large percentage of the stock is piglets, which may not boost pork supplies in a short period of time," analysts said.

 

The number of breeding sows rose for the first time this year, up 0.21% in May from a year ago, the ministry said.

 

"We expect from September, the overall hog stocks would be at a normal level, which would boost animal feed demand significantly," experts said.

 

The recovery should help spur imports of soy, of which China is the world's largest importer. Soy crushers have blamed lower hog stocks for poor crushing margins.

 

Freezing weather late last year had killed a large number of piglets and led to a lower stock of grown-up hogs ready for slaughtering in the first half of this year, said the ministry.

 

Some analysts estimate stocks of mature hogs for slaughtering could be 20% lower than a year-ago period.

 

Analysts also blamed widespread diseases as the cause of death of piglets, but the ministry did not mention any diseases, saying large-scale losses among hog farms in 2009 had prompted many to reduce their breeding size.

 

China's pork prices surged in 2008 due to widespread blue-ear disease that led to a surge of pork imports from US. China, including Hong Kong, was the largest growth market for US pork exports in 2008, according to US Meat Export Federation.

 

China's pork imports in the first four months of this year rose 39% to 80,092 tonnes after imports increased by 25.9% in the whole year of 2010 to 110,126 tonnes.

 

Spot US hog futures rose to their highest in a month on Wednesday after cash prices in the closely watched Iowa market jumped nearly US$4 per 100 lbs as dwindling hog supplies prompted a scramble to buy.

 

The ministry also attributed record corn prices and rising labour costs for high pork prices, which rose 64% on the in early June.

 

"With breeder confidence now recovering, there will be a good base for hog production later in the year and pork supply can be ensured," said the ministry.

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