August 17, 2023

China's WH Group predicts 10-20% surge in swine prices

WH Group Ltd, a major Chinese pork processing company, anticipates a surge of 10-20% in swine prices within China during the second half of 2023, compared to the initial six months of the year, underpinned by a strengthening demand dynamic and a moderation in the supply glut, Channel News Asia reported.

Ma Xiangjie, president of WH Group's subsidiary Shuanghui Development, said that the swine breeders have faced enduring losses for a prolonged seven-month stretch due to subdued swine prices. He expressed optimism regarding the forthcoming months, affirming that the swine market's landscape will ameliorate during the latter half of the year.

Elaborating on his expectations, Ma forecasted a median swine price of approximately CNY 16 (~US$2.20; CNY 1 = US$0.14) per kg for the second half of the year, exhibiting an increase from the first-half average of CNY 15.12 (~US$2.07). He also said that the projected average price for 2023 would still remain notably lower compared to the previous year, 2022.

In its recent financial report, WH Group disclosed a 45% decline in first-half profits before biological fair value adjustments, which stood at US$383 million.

According to the company filing, the group's revenue for January to June, encompassing its ownership of the world's largest pork processor, US-based Smithfield Foods, registered a 2% contraction, amounting to US$13.12 billion.

China, globally recognised as the biggest consumer of pork, observed its pork output during the second quarter achieve the highest volume for that period in at least a decade, as farmers strategically scaled up production to meet elevated demand. Despite this production boost, sluggish prices and lacklustre demand amidst an ailing economy prompted breeders to curtail their herds, consequently driving up slaughter volumes.

Ma said that pork demand is seasonally stronger in the second half of the year, which will improve the supply and demand situation.

Simultaneously, WH Group's outlook extends to swineprices in the US and Europe, where it anticipates a decrease in the second half of the year following the current seasonal peak levels. WH Group's leadership also assured that the recent torrential rains and flooding in northern China had no significant impact on the company's production operations.

-      Channel News Asia