July 25, 2008


China encouraged to launch live hog futures
Pig producers and pork processors in China are looking forward to the live hog futures which could help them to avoid risks from volatile pork prices.
Industry players face not only falling pork prices but also rising production costs and these factors are hurting profits, according to Mu Runchang, general manager of Beijing CIFCO Futures Co., Ltd.
Mu said the live hog futures should be listed as soon as possible to ensure the pig industry's stable profits and sustainable operations.


Mu expects the futures to be physically settled but may move on to be cash-settled once China completes its construction of some spot goods wholesale markets and live pigs delivery warehouses.


China, the world's largest pig producer, is forecast to slaughter 44.7 million tonnes of pigs in 2008, accounting for about 50 percent of the world's total of 97.13 million tonnes, according to Germany's estimations.


China's pork demand in 2008 is also expected to reach 44.6 million tonnes, compared to the US demand of 9.4 million tonnes and global demand of 96.9 million tonnes, a sign that live hog futures will do well in China.
South Korea's recent launching of lean hog futures is considered as a catalyst for the listing of Chinese live hog futures.
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