July 12, 2021

 

USDA: China's pork prices on decline in April-June 2021 due to glut in pork production

 

 

Excess pork production in China between April and June 2021 has caused declining pork prices, leading to small and medium producers liquidating farm inventories and limited piglet restocking, according to the United States Department of Agriculture.

 

Following the resurgence of African swine fever in China's hog herd in late 2020, sources shared that producers exhibited greater concern about the spread of the disease.

 

Hog producers were reported to be rushing to sell, causing prices to decline. From January 2021 to the end of June 2021, live hog prices fell by nearly 65% due to increased slaughter, low consumer demand and an abundance of pork availability in the market.

 

As the price for pork declined, so did piglet prices. Sources indicated that breeding farms have responded by culling less productive breeding sows which is affecting piglet production. These trends will decrease the breeding sow population, especially among small- and medium-sized producers, while supporting large producers with high efficiency sows.

 

Additionally, feed prices in China remain relatively high even though the country's industry is considering varying feed ingredient rations. Also, restocking commercial hog farms with piglets is being delayed, according to industry sources, and is expected to result in lower pork production in the second half of 2021.

 

FAS China anticipates that demand for imported pork in the second half of 2021 and early 2022 is expected to remain robust.

 

Over the past several months, small- and medium-sized commercial hog producers have liquidated overweight hogs (over 250 kilogrammes), standard-weight hogs (around 150 kilogrammes) and underweight hogs as the price for pork dropped.

 

Previously, producers were keeping overweight hogs as consumers and meat processors found the product desirable. The slaughter of underweight hogs speaks to industry concerns about disease and falling prices as small- and medium-sized producers closed down operations before animals reached market weight.

 

Sources indicated that losses for professional farrow-to-finish farms have intensified, leading to further panic selling.

 

For large-scale producers, the ability to take on short-term losses due to low pork prices has allowed them to continue to maintain production targets. However, sources indicate large producers have also scaled back on the purchase of piglets for breeding and/or scaled back the restocking of hog farms.

 

Sources noted that certain hog producers (including large-scale producers) now are retaining standard weight hogs for a "second fattening" which is the practice of continuing to feed out hogs after reaching market weight.

 

- USDA